Equity markets rebound on EU fund optimism; gold edges higher

NEW YORK (Reuters) – Global equity markets rebounded on Monday on optimism the European Union would agree on a recovery fund to help revive regional economies hit by the coronavirus, but worries about the pandemic’s economic and human toll pushed gold prices higher.

The euro rose after a bout of profit-taking on early gains that took the single currency to a 19-week high on hopes for an EU fund expected to be around 750 billion euros ($857.93 bln).

Italy’s borrowing costs fell to their lowest since early March on signs of a potential agreement, which has driven a rally in southern European bonds, led by Italy, since May.

European shares advanced on hopes for the recovery fund, while the S&P 500 and Nasdaq rose, led by technology stocks.

News that AstraZeneca’s experimental COVID-19 vaccine was safe and produced an immune response in early-stage clinical trials in healthy volunteers helped lift equities, but it was still too early to call the drug a success.

“We’re finally getting the details on these Phase I, Phase II studies that we kind of all expected to be positive, but it’s all about the Phase III and that’s where everything and anything can go wrong,” said Edward Moya, senior market analyst at currency broker OANDA in New York.

MSCI’s benchmark for global equity markets rose 0.49%. On Wall Street, the Dow Jones Industrial Average fell 0.28%, the S&P 500 gained 0.27% and the Nasdaq Composite added 1.35%.

In Europe, the broad FTSEurofirst 300 index closed up 0.73%. AstraZeneca’s shares rose 1.8% after hitting a record high ahead of a report on its vaccine.

An attempt to reach a compromise on the recovery fund failed on Sunday. A deal envisaging 400 billion euros in grants – down from a proposed 500 billion euros – was rejected by the north, which said it saw 350 billion euros as the maximum.

Discussions over the grants has since narrowed, with EU summit Chairman Charles Michel saying they would be based on 390 billion euros combined with smaller rebates.

The euro was up 0.14%, at $1.1442, while the yen gained 0.20%, to $107.2000.

The euro hit its highest against the dollar since March 9, at $1.1467 after reports of progress following three days of negotiations. [FRX/]

Graphic: Euro jumps to four-month high – here

Gold prices jumped to their highest since September 2011 and silver hit a more-than-four-year peak as a spike in COVID-19 infections and hopes for increased stimulus measures supported safe-haven demand.

Spot gold prices rose $6.7542 to $1,815.65 an ounce.

Oil prices fell as coronavirus cases increased in many countries, though investor optimism about a potential COVID-19 vaccine and ongoing talks over the European Union fund to revive economies hit by the pandemic curbed losses.

Brent crude futures rose $0.02 to $43.16 a barrel. U.S. crude futures gained $0.08, to $40.67 a barrel.

Graphic: Euro, euro zone bond markets during coronavirus crisis – here

Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.26%, reversing early losses.

Chinese markets rose more than 2% after regulators raised the equity investment cap for insurers and encouraged mergers and acquisitions among brokerages and mutual fund houses.

Prices for copper, a barometer of economic growth, fell after data showed rising inventories in Chinese warehouses and on concern that climbing coronavirus cases threatened a sustainable global recovery.

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