Global shares edge higher on earnings, China data

By Ryan Vlastelica

NEW YORK (Reuters) - Stock markets around the world edged higher on Monday as a milder-than-expected slowdown in China's economic growth lifted sentiment and early reads on U.S. earnings were positive.

Gains were limited by a lower-than-expected read on U.S. retail sales, a sign that the world's largest economy continues to have areas of weakness.

The U.S. dollar edged slightly higher while the euro was modestly lower. Yields on the 10-year U.S. Treasury rose and Bunds slipped.

European stocks <.fteu3> rose 0.4 percent while the S&P 500 was modestly higher, supported by strong earnings at Citigroup Inc . Shares of the bank rose 2 percent to $51.81, and the S&P 500 financial industry sector index <.spsy> gained 0.4 percent.

That financials are "finally doing well in a convincing way is a major bullish indicator. We believe the economy is getting better, so they should be doing well," said Nicholas Colas, chief market strategist at the ConvergEx Group in New York. "I'm impressed by the rally today."

While earnings for the second quarter have largely come in stronger than expected so far, only a small percentage of S&P 500 components have reported to date. This week will bring results from dozens of companies, including numerous Dow components.

U.S. shares were also boosted by Boeing Co , which jumped 3.3 percent to $105.23 as an investigation of a fire that broke out on one of the company's 787 Dreamliners did not blame the plane's batteries.

U.S. retail sales rose 0.4 percent in June, only half the 0.8 percent rate economists polled by Reuters had expected. The disappointment was tempered by accelerating growth in New York State's manufacturing sector in July, according to a report from the New York Federal Reserve that provides one of the earliest monthly guideposts to U.S. factory conditions.

The mixed picture added to the debate over when and how quickly the Federal Reserve would start to slow its stimulus program, which has been widely credited with driving major stock indexes to all-time highs.

China's economic growth cooled to 7.5 percent in the second quarter from a year ago, while other figures showed a healthy rise in retail sales and a minor undershoot of forecasts in industrial output. Shares in Shanghai <.ssec> rose 1 percent.

Comments by Beijing last week had led markets to think the numbers might have been weaker, so the outcome brought relief. Commodities initially drove higher, but like stocks, faced some profit-taking following a strong week last week.

The Dow Jones industrial average <.dji> was up 40.06 points, or 0.26 percent, at 15,504.36. The Standard & Poor's 500 Index <.spx> was up 3.92 points, or 0.23 percent, at 1,684.11. The Nasdaq Composite Index <.ixic> was up 8.05 points, or 0.22 percent, at 3,608.13.

The MSCI world index <.miwd00000pus> rose 0.3 percent.

Oil rose 0.3 percent, reaching a three-month high, while copper, gold and silver all registered minor losses.

The Australian dollar, closely attuned to China's fortunes due to the country's appetite for Aussie raw materials, lost some of its post-data ground to stand 0.2 percent higher at $0.9095. The U.S. dollar was up 0.1 percent against a basket of currencies <.dxy>. The euro was flat at $1.3064.

Graphics:

Asset returns in 2013: http://link.reuters.com/dub25t

Euro zone debt crisis http://r.reuters.com/hyb65p

Currencies v dollar in 2013 http://link.reuters.com/tak27s

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In the bond market, trading was largely subdued. The benchmark 10-year U.S. Treasury note was up 10/32, the yield at 2.5541 percent.

Benchmark German Bund futures were 0.2 percent lower at 143.38, having gained almost two points last week, while a sell-off in Portuguese bonds steadied as traders awaited developments after the country's political troubles.

French bonds gave a Gallic shoulder shrug to a downgrade by Fitch, which on Friday became the last of the big three ratings firms to strip Paris of its AAA status.

"Conservative bond investors, such as reserve managers, used to have triple-A only mandates, but they have adapted to the reality that there aren't many triple-As anymore," said Nikolaos Panigirtzoglou, head of global asset allocation at JPMorgan.

(Editing by Leslie Adler and Dan Grebler)

Source: http://news.yahoo.com/asian-stocks-holding-pattern-ahead-china-risk-003442559.html

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