LONDON (Reuters) - World shares hit their highest level since June 2008 and the dollar touched a fresh 3-1/2-year high against the yen on Friday, ahead of U.S. jobs data expected to point to a continuing pick up in the world's biggest economy.
China also gave markets a boost as official data showed February exports grew 21.8 percent versus a year ago, more than double the expected rise.
European shares <.fteu3>, which have rebounded strongly after last week's Italian election and U.S. spending cuts-related wobble, were up 0.5 percent by mid-morning and on track for their biggest weekly gain since the start of the year.
Japan's Nikkei hit a 4-1/2 year high in Asian trading and 0.3, 0.7 and 0.5 rises by London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> helped MSCI's world share index <.miwd00000pus> to its highest level since late June 2008.
"There appears to be a strong risk-on mood in the market at the moment," said Ken Wattret, co head of European market economics at BNP Paribas.
"The negativity from the Italian elections was shrugged off pretty quickly, the Fed has made it clear that its policy will remain accommodative. If we get a get a good set of payrolls numbers, that will further fuel that sentiment."
Investors have been returning to stocks and other riskier assets over the last eight months as slowly improving world growth has been bolstered by the European Central Bank's pledge last August to prevent a break-up of the euro.
Friday's U.S. payrolls report, due at 8.30 a.m. ET is expected to show U.S. employers added 160,000 jobs last month, picking up slightly from January's 157,000 count.
It is key to gauging the Federal Reserve's policy course following the central bank's promise that as long as inflation doesn't pose a threat it will keep U.S. interest rates near-zero until unemployment falls to 6.5 percent.
DOLLAR STRENGTH
In the currency market, the sudden spike in tensions on the Korean peninsula added to the more dominant U.S. growth-led demand for the dollar <.dxy>.
Having said earlier in the week it was scrapping its armistice with South Korea, North Korea threatened the United States on Thursday with a preemptive nuclear strike after accusing it of warmongering.
The dollar <.dxy> was up 0.2 percent against a basket of major currencies but most of the focus was on its continued rise against the yen as it hit a 3-1/2 year high of 95.53 yen.
If the Bank of Japan's new leaders expands its stimulus program next month as expected, the dollar could trade in the 95-98 yen area or even open the way for a test of 100 yen, said Ronald Ip, Director of Wealth Solutions Group for HSBC Global Markets.
The euro, meanwhile, eased 0.1 percent, but clung to the bulk of the gains made the previous day, after the European Central Bank wrong-footed investors who had positioned for a more clear-cut signal on rate cuts from its head Mario Draghi.
Data from the euro zone continued to support the calls for a rate cut that some of the ECB's members had been pushing for at the bank's monthly meeting.
Although it was slightly better than had been expected, Spain's industrial output fell 5 percent year-on-year in January, the seventeenth month of declines. France's central bank also maintained its view that its economy will only just dodge recession in the first quarter of the year.
GRADUAL GAINS
With demand for low-risk assets cool ahead of the U.S. data, German Bund futures were little changed at 142.86 by mid-morning having fallen the previous day after the ECB's less dovish than expected tone.
Italian bonds continued to claw back the ground they lost after last week's inconclusive election result re-ignited concerns about its fiscal rehabilitation program.
The stronger dollar and the bright Chinese data were also the focus of commodity markets. Most of the world's raw materials are bought and sold in dollars so its movements can have a strong influence on prices.
Oil prices steadied above $111 a barrel, leaving them almost bang in line with where they started the year, while both copper and gold were little changed.
After a week which has seen five the world's top 10 central banks decide to leave policy unchanged in the face of a very modest global growth outlook, expectations for gradual gains in riskier assets are unchanged.
"We continue to look for ways to gradually build risk rather than reduce, and what we're seeing from the central banks leaves us unchanged in that view," Johan Jooste, chief market strategist at Merrill Lynch Wealth Management said.
"It's not like we're sittings on our hands. What we're doing is, at the margin, adding risk rather than piling straight into it at these levels."
(Additional reporting by Richard Hubbard; editing by Philippa Fletcher)
Source: http://news.yahoo.com/asian-shares-edge-dollar-fresh-peak-vs-yen-050355490--finance.html
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