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GLOBAL MARKETS-World stocks rise on French vote relief, Trump tax plan talk

Published 2017-04-25, 05:06 a/m
Updated 2017-04-25, 05:10 a/m
© Reuters.  GLOBAL MARKETS-World stocks rise on French vote relief, Trump tax plan talk

* European shares add to Monday gains, Asia bourses rise

* Euro up but off Monday highs, yen retreats

* German/French yield gap tightens as politucal risk seen lower

* Markets await Trump tax announcement on Wednesday

* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh

By Nigel Stephenson

LONDON, April 25 (Reuters) - World stocks hit record highs on Tuesday, with investors' relief at centrist Emmanuel Macron's victory in the first round of the French presidential election supported by speculation about U.S. tax reform.

Safe-haven assets such as gold and the Japanese yen retreated as opinion polls suggested Macron would easily beat far-right, anti-EU candidate Marine Le Pen in a May 7 run-off.

The yield gap between French and German short-term government bonds, a closely watched measure of political risk in the euro zone, tightened further after hitting a three-month low on Monday DE2FR2=RR .

"This (the second round) is going to be a non-event for the market," said Commerzbank (DE:CBKG) currency strategist Thu Lan Nguyen in Frankfurt.

"Markets have pretty much priced out the risk of a Le Pen victory, and rightly so, because the first round of the elections has shown that the polls in France were correct...and this increases the confidence in the polls for the second round...It's highly likely that (Macron) is going to win."

European shares measured by the STOXX 600 index .STOXX edged up by 0.2 percent, after rising 2.1 percent on Monday. French shares .FCHI pulled back 0.1 percent, having risen 4.1 percent on Monday in their biggest daily gain since August 2012.

Euro zone bank shares .SX7E edged higher after big gains on Monday. The European Central Bank said in a quarterly survey of lenders that while banks would tighten access to credit for companies in the second quarter, lending volumes were still expected to rise broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.6 percent, hovering near its highest level since June 2015 hit earlier in the session, on its fourth straight day of gains.

Japan's Nikkei .N225 rose more than 1 percent to a three-week high. South Korea's KOSPI .KS11 also advanced 0.7 percent to its highest level since April 2015.

These gains helped push MSCI's world stocks index, comprising shares from 46 countries .MIWO00000PUS to a fresh all-time high after chalking up its biggest rise since shortly after Britain's vote last June to leave the European Union.

The euro added to Monday's gains against the dollar, rising 0.2 percent to $1.0884, albeit off Monday's high of $1.0940 EUR= .

The yen, however, pulled back 0.6 percent to 110.39 per dollar. Sterling GBP=D3 rose 0.1 percent to $1.2806.

The Canadian dollar CAD= fell 0.5 percent to C$1.3561 per U.S. dollar aftre the United States announced new duties avearging 20 percent on Canadian softwood lumber imports.

French and German 10-year government bond yields DE10YT=RR FR10YT=RR rose and the spread between them hit its tightest since November at around 41 basis points. The two-year spread was its narrowest since late January.

TRUMP TAX TALK

With one of the year's major risks to markets seen less acute, markets were also looking ahead to other factors, including U.S. President Donald Trump's promise to announce on Wednesday "a big tax reform and tax reduction". Wall Street Journal reported Trump wanted to cut the corporate tax rate to 15 percent. The White House budget director told Fox News on Monday Trump's announcement would focus on principles, ideas and rates.

"I'm becoming little concerned over the President's big announcements, especially since we haven't seen any major legislative achievement so far and he will be marking his 100th day in the White House this Saturday," said FXTM chief market strategist Hussein Sayed in a note.

Gold, sought as a shelter for wealth in turbulent times, fell 0.4 percent to just under $1,270 an ounce.

Copper reversed falls in Asia and headed higher, last trading 0.7 percent higher at $5,695 a tonne CMCU3 .

Oil prices steadied after six straight days of losses. Brent crude, the international benchmark LCOc1 , was just 4 cents down on the day at $51.59 a barrel.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

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