LONDON, Dec 9 — Weaker stocks in parts of Europe were not enough to halt world shares today, as upbeat Chinese trade data added to cautious optimism that the world’s economy and markets can cope with a gradual withdrawal of US stimulus.

The moves helped both the dollar and the euro extend their gains on the yen, with the euro zone’s currency hitting a new five-year high in what should be a boost to Japanese exports, profits and stocks.

While the solid US jobs report may have brought forward the day when the Federal Reserve starts tapering its asset buying, the figures also suggested the economy was recovering well enough to withstand the move.

Two Fed members are due to speak later in the week and markets will be highly sensitive to any comments that give a flavour of the US central bank’s assessment of the pick-up in the data.

Wall Street was expected to open slightly higher when trading resumes. Both the S&P 500 and Dow Jones Industrial Average jumped more than 1 per cent on Friday though it was not enough to prevent a first weekly fall in nine.

In Asia, Tokyo’s Nikkei had climbed 2.3 per cent to leaving it nose-to-nose with last week’s peak at 15,794 and although the upbeat sentiment faded in Europe, the region’s FTSEurofirst 300 was back level after a morning wobble.

Paris’s CAC 40 and London’s FTSE were the only ones left in the red while Frankfurt’s Dax outperformed as robust trade data offset a surprise fall in factory output.

“What is interesting is that markets are not pricing in any significant fall in stocks in January,” said Ramin Nakisa, a global macro strategist at UBS in London, referring to the month UBS expects tapering to start.

The Fed has had considerable success in persuading investors that tapering is not tightening, and that interest rates will remain low for a long time to come.

Treasuries and European bonds remained resilient through the morning, with German bonds barely budged and 10-year US yields steady at just below 2.85 per cent having briefly spike to 2.93 per cent on Friday.

Yen slips

The improvement in risk appetite knocked safe havens like the yen, lifting the US dollar as high as ¥103.23 (RM3.21) today and not far from last week’s highs around ¥103.37 before it faded back to ¥102.90.

The euro had shot up to ¥141.55 (RM4.41), territory not visited since October 2008, while also making ground on the US dollar. It briefly touched US$1.3748 (RM4.43) early today before edging back to last trade at US$1.3703.

The currency has been underpinned by rising short-term interest rates after the European Central Bank dampened hopes for an imminent easing move.

“To define portfolios of government bonds of euro zone member states and then to buy them would pose immense economic, legal and political challenges for the ECB,” one of the central bank’s top policymakers, Yves Mersch, said in Frankfurt.

Aiding sentiment in Asia was a set of robust trade numbers from regional powerhouse China over the weekend, encouraging the central bank to set the yuan at a fresh record high.

China’s exports came in well above forecast in November, rising 12.7 per cent from a year earlier, while imports rose 5.3 per cent.

“The strength is likely supported by the recent improvement in global manufacturing activity, as evidenced by the strong (purchasing manager indexes) prints in major advanced economies,” wrote analysts at Barclays.

Thailand tensions

That should be positive for many commodities with China importing a record amount of iron ore in November, while oil imports rebounded.

Prices for iron ore have been surprisingly firm around US$139 a tonne recently, good news for Australia as it is the country’s single biggest export earner.

That helped the Australian dollar nudge ahead to as much as US$0.9145 today before some profit taking kicked-in, well up from Friday’s lows around US$0.8989.

Emerging market attention remained on Thailand after Prime Minister Yingluck Shinawatra called snaps elections in an attempt to defuse the country’s tensions.

The Thai baht rose almost 1 per cent versus the dollar initially only to backslide along with Bangkok shares as anti-government protest leaders vowed to fight on.

US crude oil futures were trading 7 cents firmer at US$97.65, having surged more than 5 per cent last week. Brent edged around US$111.61 a barrel.

Gold has not been so fortunate, stuck at US$1,228.25 and only just above five-month lows. “Three digit gold is not our central case but it is possible,” said UBS’s Nakisa. — Reuters