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Graphic: World FX rates
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Graphic: Global asset performance By Elizabeth Howcroft
LONDON, March 3 (Reuters) - European stocks rose in
early trading on Friday, as investor risk appetite was boosted
by signs of an economic recovery in China, even after
expectations for European Central Bank rate hikes kept
government bond yields at their highest in years.
Investors are trying to gauge the path for Federal Reserve
rate hikes, after strong U.S. data in recent weeks suggested
rates may need to be higher for longer.
But stock markets rose on Wall Street overnight, in a move
analysts attributed to Atlanta Federal Reserve President Raphael
Bostic saying on Thursday that the Fed should stick to "steady"
quarter-point rate hikes.
Gains continued during Asian trading, with investors
optimistic about signs that the world's second-biggest economy
is making a steady rebound after the Chinese government ditched
stringent COVID controls in December.
Activity in China's services sector expanded at the fastest
pace in six months in February, driving a solid increase in
employment, a PMI survey showed.
At 0940 GMT, the MSCI world equity index ,
which tracks shares in 47 countries, was up 0.3% on the day and
set for a 0.8% rise on the week overall.
Europe's STOXX 600 was up 0.6% and London's FTSE
100 was up 0.2% .
"We seem to be in a tug of war between the China reopening
theme which basically means re-rating global growth expectations
higher and the Fed re-pricing," said Vasileios Gkionakis,
European head of FX strategy at Citi.
Gkionakis said that although risk assets faced headwinds
from tighter monetary policy, global demand is picking up.
The recovery in euro zone business activity gathered pace
last month, PMI survey data showed.
Euro zone government bond yields were still near their
highest in years after euro zone inflation data on Thursday
drove market expectations for the ECB's terminal rate to around
4%.
Estonian central bank chief Madis Müller made the case for
further ECB rate hikes on Friday, while ECB vice president Luis
de Guindos warned of persistent inflation.
The 10-year U.S. Treasury yield edged down to 4.0067% from
Thursday's high of 4.091% .
At 2.744%, the benchmark 10-year German yield was at its
highest level since 2011 and on track for its biggest weekly
rise since December .
The euro was up 0.1% on the day at $1.0609 , while
the U.S. dollar was down 0.2% against a basket of currencies .
Oil prices slipped, with Brent crude futures down 0.2% and West Texas Intermediate crude futures down 0.3% .
Cryptocurrencies suffered as the crisis engulfing
crypto-focused bank Silvergate worsened. Bitcoin was down around
4.7% at around $22,373, its lowest since Feb. 15 .
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(Reporting by Elizabeth Howcroft; Editing by Alexander Smith)
