World shares hit 6-month high, oil chases $70 a barrel

LONDON: Global markets' fast start to the year continued on Tuesday as world shares inched to a six-month high, Brent oil neared $70 a barrel for the first time since November and the dollar showed renewed signs of strength.

Some brightening of the global industrial mood - at least in China and the United States - had to compete with another dour U.S. retail sales report, Britain's broken Brexit plans and turbulence in Turkey, but it seemed to be enough.

European bourses shook off an early wobble to climb for a third day, while the S&P 500 looked set to add another few points to its best start to a year since 1998 as the MSCI world did the same.

Europe was led by a near 1 percent jump in London's FTSE 100  which was lifted by a 0.6 percent weaker pound  after the UK parliament failed once again on Monday to find any alternative to Prime Minister Theresa May's Brexit divorce deal.

May was hunkered down in hours of cabinet meetings with her senior ministers on Tuesday to plan her next moves, but it seemed more in hope than expectation and EU officials warned again of a 'no-deal' crash out for the UK.

It also meant investors stuck with UK Gilts, and safe-haven German bonds, negative yields notwithstanding, in the bond markets despite a pop back higher in key U.S. yields in recent days.

"It does seem that British MPs want to avoid a no-deal Brexit by all means, but they are not voting for any of the alternatives and time is running out," DZ Bank strategist Daniel Lenz said.

"So I think investors have to prepare for the possibility that no-deal Brexit is on its way in 10 days' time."

Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan ended up 0.2 percent and at a seven-month high after also rallying more than one percent in the previous session.

Chinese bluechips scored a 10-month high, leapfrogging Colombia to the top of the leaderboard of world share markets, while Australian shares gained 0.4 percent after the Aussie dollar dropped following a meeting of the country's central bank.

The RBA held interest rates steady and highlighted the strength of employment, showing no immediate inclination to echo the outright dovish tone of some of its global peers.

Nevertheless it highlighted "downside risks for the global growth environment" and with elections coming soon markets were betting the RBA will ultimately be forced to ease its rates, if only to stop the Aussie dollar from rising.

OIL ON THE BOIL

The other big shift taking place was in oil markets where prices hit fresh 2019 highs after a U.S. official said on Monday that Washington was considering more sanctions on Iran and a key Venezuelan export terminal halted operations.

U.S. crude futures traded at $61.90 per barrel, up 0.5 percent on the day while Brent futures were eyeing $70 a barrel for the first time since November at $69.19.

"China's PMI number was the most significant monthly increase since 2012, which should ease concerns around a potential threat to oil demand," said Stephen Innes, head of trading and market strategy at SPI Asset Management.

Copper and gold both ticked down in the industrial and precious metals markets but in the digital world, Bitcoin suddenly came back to life.

It jumped more than 20 percent to touch $5,000 at one point, its highest since November. Crypto-analysts pointed to a large order in a thin market, though there wasn't any obvious trigger for the order immediately apparent.

The upward swing pushed Bitcoin through its 200-day moving average for the first time in more than a year. The value of the unit plunged last year as global authorities tightened their regulation of the market.

The dollar index, which measures the U.S. currency against a basket of rival currencies, rose as much as 0.3 percent to 97.430 which left the euro at $1.12, the yen at 111.37 and the pound worth $1.3030.

In emerging markets, gains in MSCI's EM share index  were capped at 0.25 percent, after currency volatility in countries such as Turkey and South Africa that were under pressure from political tension and weak local manufacturing.

The lira gave up 1.4 percent after the United States halted delivery of equipment related to the F-35 fighter aircraft, its first concrete step after Ankara pressed on with plans for a Russian-made missile defense system.

The disagreement is the latest in a series of diplomatic spats between the U.S. and Turkey, which were partly responsible for pushing the currency into crisis last year.

It also comes after a heavy-handed clampdown on the international lira market designed to prevent big lira swings before last weekend's local elections that saw President Tayyip Erdogan's AK Party lose both Istanbul and Ankara.

"A close eye will need to be kept on the level of (Turkey's)FX reserves -- US$ 71.4 bln in March-- which cover around 3 months of imports and is equal to around 40 percent of short-term foreign debt," analysts at Jefferies wrote in a note.