Global stocks extend rally; oil edges off 11-year low

Global stocks extended a rally into a third day on Wednesday as oil edged up from 11-year lows and the dollar eked out minor gains in trade gradually winding down for the holidays.

European shares rose on the last full trading day before the Christmas break, following Asian bourses higher.

The pan-European FTSEurofirst 300 index rose 1.5 per cent, led by miners which rallied on higher copper prices. London-listed miners Glencore and Anglo American both rose more than 4 per cent.

“We think commodities are due for a bounce, and that should help mining stocks,’’ HED Capital managing director, Richard Edwards, said.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6 per cent to the highest in almost two weeks. Tokyo markets were closed for the Emperor’s Birthday holiday.

In China, the blue-chip CSI 300 index broke a four-day winning streak and closed down 0.3 per cent, while the Shanghai Composite index ended down 0.4 per cent.

China’s state news agency Xinhua said slashing the country’s excess steel capacity would be a top priority for the government over the next five years.

MSCI’s all-country world stocks index was up 0.36 per cent, though it is down 4.5 per cent for the year.

Equity investors were encouraged after gains of 1 per cent in the Dow Jones industrial average lifted Wall Street for a second day on Tuesday.

Data on Tuesday showed US economic growth in the third quarter was revised down slightly to a 2.0 per cent annual pace but this still beat forecasts.

Oil prices struggled to lift off lows plumbed earlier in the week. Brent crude, the global benchmark, stood at $36.50 a barrel, up 39 cents, having touched an 11-year low of $35.98 late on Tuesday.

The dollar strengthened versus the euro and held broadly steady against a basket of major currencies.

The euro fell 0.3 percent to $1.0922 while the Japanese yen was barely changed at 120.97 per dollar.

The euro has performed well this year at times of risk aversion, as investors have unwound carry trades in which the euro is borrowed then sold for higher-yielding currencies.

“When you are in an environment where rate expectations are stable, the euro is mostly driven by risk sentiment,’’ said Credit Agricole currency strategist Manuel Oliveri in London.

Yields on low-risk government bonds were little changed. German 10-year Bunds, the euro zone benchmark, yielded 0.61 per cent, up 1 basis point on the day.

Ten-year U.S. Treasuries yielded 2.239 per cent, unchanged from Tuesday’s close in New York.

Gold traded at $1,071.60 an ounce.