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European stocks extend rally, dollar steady

Sydney - European shares carried forward a rally from Japan and the US, where the S&P 500 index notched its best week in five years. Oil advanced while the dollar steadied against major peers.

The Stoxx Europe 600 index climbed on the strength of banking and travel shares. Japanese stocks climbed as the yen’s rally faded, helping Asian equities build on their best week since September 2016. German bunds retreated and the euro edged higher. US equity futures rose. Markets in Hong Kong and China are closed for the Lunar New Year holiday.

European markets are the center of investor attention on Monday as US stocks and Treasuries take a break for Presidents’ Day holiday. The continent’s equity gauge has trailed its American counterpart since a global selloff earlier this month due to a jump in the euro.

By Tuesday, the floodgates will be opened for the US Treasury, and it’ll be up to bond traders to signal how much that extra supply will cost American taxpayers.

The Treasury will pack in auctions totaling $258bn this week, including record-sized sales of three-and six-month bills. With little in the way of significant economic data ahead, the sales will provide the clearest gauge yet of just how steeply borrowing costs may rise.

In Asia, currency traders saw the yen retreat from a 15-month high even as data showed Japan’s exports and imports grew strongly in January from a year earlier in a sign the economy continues to expand. Traders return to their desks in Hong Kong on Tuesday, while Chinese markets reopen on Thursday.

Here are some key events scheduled for this week:

• Bank of England Governor Mark Carney on Monday addresses the Parliament’s Treasury Committee on the February 8 policy decision and forecasts.

• A slew of UK economic data is due this week including fourth-quarter GDP and employment figures.

• The Reserve Bank of Australia releases minutes of its February meeting on Tuesday.

• The US Treasury plans to sell $151bn of debt in three auctions on Tuesday that will result in the heaviest day of T-bill supply on record, according to Bloomberg data going back to 1994. 

• The Federal Reserve will release minutes on Wednesday of its January 30 to January 31 meeting, Janet Yellen’s last as chair, where officials kept the rate unchanged.

• Fed policy makers speaking this week include New York Fed President William Dudley and Atlanta Fed President Raphael Bostic. Cleveland Fed President Loretta Mester is among speakers at the US Monetary Policy Forum in New York City. 

• Companies announcing earnings this week include: Walmart, Home Depot, HSBC, BHP Billiton, Glencore, Barclays.

These are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index climbed 0.1% as of 09:35, the highest in two weeks.

• Futures on the S&P 500 Index gained 0.3%, reaching the highest in more than two weeks.

•The MSCI Asia Pacific Index jumped 0.8%, its sixth consecutive advance.

• The UK’s FTSE 100 Index advanced 0.1% to the highest in two weeks.

• The MSCI Emerging Market Index increased 0.2%.

Currencies

• The Bloomberg Dollar Spot Index climbed less than 0.05%.

• The euro advanced less than 0.05% to $1.2407.

• The British pound dipped 0.1% to $1.4014.

• The Japanese yen dipped 0.3% to 106.57 per dollar, the largest decrease in almost two weeks.

• The rand declined 0.7% to 11.677 per dollar, the biggest fall in more than a week.

• The MSCI Emerging Markets Currency Index gained 0.1% to 1 721.94 per euro, the highest in more than two weeks.

Bonds

• Germany’s 10-year yield advanced two basis points to 0.72%, the biggest rise in more than a week.

• Britain’s 10-year yield climbed one basis point to 1.593%.

Commodities

• West Texas Intermediate crude increased 0.8% to $62.16 a barrel, the highest in almost two weeks.

• Gold advanced 0.1% to $1 347.70 an ounce.

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