* Steel stocks gain on talk of U.S. import curbs
* Dollar edges up from 3-year lows
* Oil near 2-week highs
By Ritvik Carvalho
LONDON, Feb 19 (Reuters) - World stocks were set for a sixth
session of gains on Monday, extending a recovery from a selloff
sparked by fears of creeping inflation and higher borrowing
Gains were marginal however, and scored largely in Asian
markets, with Japan's Nikkei 225 up 2 percent. European
bourses gave up initial gains to turn lower, with the
pan-European STOXX index down 0.2 percent.
Trading was slower than usual due to market holidays in the
United States and China, but moves in the steel sector were
pronounced in the wake of the U.S. government outlining
proposals for hefty import curbs.
Shares in Tenaris, Outokumpu and
Arcelor Mittal - which have facilities in the United
States - were the biggest gainers in Europe, up between 2.2 and
The MSCI world index, which tracks shares in 47 countries,
was up 0.1 percent. The index has recovered
nearly half of its losses from late January to last week's low,
posting a gain of 4.3 percent last week. That was its best
weekly performance since December 2011.
The rebound came after a two-week rout that wiped off over
$6 trillion in global stock market value at one point, triggered
by worries of a rise in U.S. inflation.
The sell-off took place even as the corporate earning
outlook improved on the back of strong global growth, bringing
down equity valuations off highs hit earlier this year.
Just before the market ructions in late January, world
shares were trading at 16.66 times their expected earnings, the
highest levels since 2004, according to Thomson Reuters
Datastream. They are currently at 15.33 times.
"Market confidence often attracts even more market
confidence, and that is what we are seeing at the moment," said
David Madden, markets analyst at CMC Markets.
"The cooling of the volatility index (VIX) has given some
dealers the green light to buy back into the stock market, and
while the fear factor keeps sliding, it is likely equity
benchmarks will continue to push higher."
Equity investors have drawn some reassurance from a fall in
the VIX - a measure of implied volatility on the S&P 500
index, also known as Wall Street's "fear gauge".
The index has remained below 20 for three days, last reading
at 19.46. It spiked to a 2-1/2-year high of 50.3 two weeks ago,
a jump that caused massive losses among investors who bet equity
markets would stay stable on a combination of solid economic
growth and moderate inflation.
In bond markets, Greek government bond yields dipped after a
ratings upgrade from Fitch that highlighted improving sentiment
towards the indebted southern European state.
That marked an outperformance of euro zone peers, with
yields across the currency bloc creeping higher in the absence
of any fresh drivers.
The U.S. 10-year Treasuries yield fell to 2.87 percent.
It had risen to a four-year high of 2.944 percent
The two-year U.S. yield hit its highest level
since 2008 last week as investors bet the Federal Reserve would
raise interest rates at its next policy meeting in March. The
U.S. cash bond market is shut on Monday for a holiday.
The minutes of the Fed's last policy meeting, held amid the
equities tumble on Jan. 30-31, are due on Wednesday. Besides the
outlook on rates, markets will be keen to see what, if anything,
the Fed makes of the gyrations in markets.
DOLLAR EDGES UP
In the currency market, the dollar edged up from three-year
lows against a basket of currencies.
The euro stood at $1.2406, backing down from Friday's
three-year high of $1.2556.
The dollar traded at 106.63 yen, bouncing back from
its 15-month low of 105.545 set on Feb 16.
The U.S. currency has been weighed down by a barrage of
factors, including worries about widening U.S. trade and budget
deficits and speculation Washington might pursue a weak dollar
There is also talk that foreign central banks may be
reallocating their reserves out of the dollar.
The weaker dollar propped up commodities.
U.S. West Texas Intermediate crude rose 0.65 percent
percent in Monday Asian trade to $62.08 per barrel.
Brent crude rose 0.3 percent to $65.05 per barrel.
(Reporting by Ritvik Carvalho; Editing by Robin Pomeroy)
First Published: 2018-02-19 03:17:18
Updated 2018-02-19 11:58:15
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