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Pfizer vaccine hopes aid world stocks; U.S. dollar, gold on the defensive

Kitco News

NEW YORK/LONDON (Reuters) - Global shares rose on Friday while the dollar was on the defensive, after drugmaker Pfizer Inc PFE.N said it may apply for a U.S. emergency use of its COVID-19 vaccine in November, assuaging market fears that a resurgent pandemic may scuttle a fragile economic recovery.

As the global race to develop a coronavirus vaccine heats up, financial markets have tracked every twist and turn, hoping a successful deployment would hoist the world economy into a sustained rebound after a harrowing shutdown in the spring.

Even though financial markets are susceptible to the frequent successes and setbacks that come with vaccine development, analysts say some investors are now looking past the near-term turbulence to focus on a likelier turnaround in 2021.

The S&P 500 .SPX was up 21 points, or 0.6%, at 3,504.84, while the Dow Jones Industrial Average .DJI jumped 235 points, or 0.8%, to 28,730.13. The Nasdaq Composite .IXIC climbed 84 points, or 0.7%, to 11,797.96.

Shares of U.S. drugmaker Pfizer added 2.4%.

“There is a general consensus that things will be better next year,” said Rick Meckler, a partner at Cherry Lane Investments, a family investment office in New Jersey. “We go back and forth, but people are somewhat hopeful.”

The cheer also benefited European shares. The pan-European STOXX 600 .STOXX jumped 1.3% after losing over 2% on Thursday, after tighter social restrictions in major French cities and London spooked investors.

Asian shares also managed to notch modest gains, even though shares in China and Japan posted slim declines. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.3%, while Chinese stocks .CSI300 edged down 0.2% and Japan's Nikkei .N225 lost 0.4%.

The improved mood on the trading floors knocked the U.S. dollar, usually perceived as a safe haven, lower on Friday. The dollar =USD slipped 0.2% against a basket of six major currencies.

A softer dollar helped the euro EUR=EBS regain some ground, with the euro rising 0.2% to $1.1734.

Sterling was on the defensive after UK Prime Minister Boris Johnson told businesses to get ready for a no-deal Brexit in case negotiations with the European Union fail to produce a free trade agreement.

However, a promise by the head of the European Commission that the bloc's team would go to London next week to continue talks with the UK gave the pound some reprieve. Sterling GBP=D3 pared earlier losses and was up 0.2% at $1.2920.

The slight pull-back from safe-haven assets weighed on gold prices. The price of spot gold XAU= dipped 0.2% to $1,904.96 per ounce.

However, in a sign that the world economy is not out of the woods and not all investors are upbeat about the outlook, oil prices fell on concerns that the spike in COVID-19 cases in Europe and the United States will curtail demand in two of the world’s biggest fuel-consuming regions.

“It’s a tug-of-war between risks that are well-flagged, the pandemic, the U.S. election, Brexit, and at the same time hope that these same risks can be resolved in matter of weeks or months”, said Emmanuel Cau, head of European equity strategy at Barclays.

Brent crude futures for December LCOc1 fell 1% to $42.73 a barrel and U.S. West Texas Intermediate crude futures for November delivery CLc1 slid 1.1% to $40.5.

Also exposing market angst, Germany's 10-year bond yield DE10YT=RR was set for its biggest weekly drop since June and was hovering near seven-month lows.

The 10-year U.S. Treasury yield US10YT=RR edged as high as 0.757%, however, buoyed by data that showed U.S. retail sales increased more than expected in September.

Reporting by Koh Gui Qing in New York and Julien Ponthus in London; Editing by Tomasz Janowski and Matthew Lewis

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