* Soaring yen dominates world markets
* Euro zone economy surprises in Q1
* Oil has $50/barrel in its sights
By Jamie McGeever
LONDON, April 29 (Reuters) - The yen hit an 18-month high on
Friday as investors wagered the Bank of Japan might be done
adding fresh stimulus to the economy, culminating in a sharp
rise on the week that dragged stocks around the world lower.
With Japan on holiday, speculators drove the yen through
107.00 per dollar JPY= for the first time since October 2014.
It was around 112.00 before the BOJ unexpectedly held policy
steady earlier this week.
Often seen as a sign of broader risk aversion among
investors, the strong yen coupled with a decline on Wall Street
overnight pushed Asian and European stocks into the red.
Major European stock markets fell more than 1 percent in
their biggest fall in over three weeks, while U.S. futures
pointed to a lower open on Wall Street ESc1 .
"Dollar/yen is not undervalued, and global macro conditions
are by no means positive for risk sentiment," Bank of America (NYSE:BAC)
Merrill Lynch analysts wrote in a note to clients, adding that a
test of 100 yen in the coming months is likely.
The index of 300 leading European shares was down 1.3
percent at 1,355 points, the German DAX .GDAXI and France's
CAC 40 .FCHI were also down around 1.3 percent, and Britain's
FTSE 100 .FTSE was 0.8 percent lower.
Surprisingly strong first quarter euro zone growth - the
fastest growth in five years finally bringing the region's
economy above its pre-crisis peak - supported the euro, keeping
it up 0.4 percent on the day at $1.14 EUR= .
A high exchange rate hurts exporters, however, and European
stocks felt the brunt.
First quarter U.S. and European earnings reports continued
to stream in. Notable was Amazon's AMZN.O upbeat figures that
sent the stock up almost 13 percent, easing the gloom after
Apple AAPL.O shed 3 percent when billionaire investor Carl
Icahn said he no longer has a position in the tech giant.
Earlier MSCI's broadest index of Asia-Pacific shares outside
Japan .MIAPJ0000PUS lost 0.5 percent, on track for a decline
of 1.7 percent for the week. That would be its biggest weekly
loss in over two months.
DOLLAR DIP
Japan's Nikkei was closed Friday for the Golden Week
holidays which will run into next week, but closed 5.2 percent
lower this week.
The yen is up more than 4 percent against the dollar this
week, putting it on track for its best week since the depths of
the global crisis in October 2008 and one of its best weeks
since the 1990s.
It had been at 111.67 yen per dollar before Thursday's
surprise decision by the BOJ not to ease policy further.
The dollar remained on the back foot following Thursday's
GDP data that showed the U.S. economy virtually ground to a halt
in the first quarter, expanding at only at 0.5 percent
annualised pace. That was the slowest growth in two years.
The dollar index, a measure of the greenback's value against
a basket of currencies, fell 0.4 percent .DXY on Friday and
was on course for its third consecutive monthly decline,
something not seen for five years.
"The decline in U.S. yields leaves the dollar vulnerable and
we remain long euro/dollar, looking for the pair to reach $1.16
in the next two months," BNP Paribas (PA:BNPP) currency strategists said
on Friday.
Elsewhere in currency markets China's central bank fixed the
yuan 0.5 percent higher on Friday, marking its biggest one-day
appreciation since the landmark revaluation in July 2005.
CNY=SAEC .
The 10-year U.S. Treasury yield was flat on the day at 1.84
percent US10YT=RR , and down around 10 basis points since the
Fed's policy meeting on Wednesday.
The reversal in the U.S. dollar proved a boon for most
commodities with oil reaching 2016 highs for a third straight
session. Brent has climbed nearly 80 percent since hitting
12-year lows of around $27 a barrel in late January. O/R
Brent crude LCOc1 was up 0.5 percent at $48.40 a barrel,
poised for a weekly gain of 7 percent. U.S. crude CLc1 was up
nearly 1 percent at $46.43, on track for an increase of more
than 6 percent for the week.
The two benchmarks are still up 20 percent or more in April,
with Brent on track for its largest monthly gain since May 2009.
The weak dollar helped propel gold higher for the fifth
straight day, up nearly 1 percent at $1,276 an ounce XAU= .
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Shanghai CSI 300 and global effects interactive https://t.co/YqIYLIbInP
Chinese A-shares vs developed and emerging stocks http://link.reuters.com/rac25w
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