LONDON (Reuters): World shares hit a new high on Monday, led by China, though the global rally faded in Europe as investors looked ahead to central bank meetings in the United States and worried over Greece.
The dollar edged up but held close to Friday’s 2 1/2-week lows, after weak US data on Friday reinforced expectations the Federal Reserve would not raise interest rates any time soon.
Chinese stocks led Asian equities to seven-year highs on expectations of more stimulus from Beijing, building on positive momentum after forecast-beating results from major US tech companies drove Wall St to record closing highs on Friday.
European shares fell in early trade. The FTSEurofirst 300 index was down 0.4%, hit by concern about a lack of progress in talks between debt-strapped Greece and its international creditors.
The MSCI world equity index, which tracks shares in 45 countries, hit a new record high of 442.13 points before pulling back. It was last down 0.1%.
Chinese shares hit fresh seven-year highs, led by heavyweight state-owned enterprises after state media reported the central government would, through mergers and acquisitions, drastically slash the number of conglomerates it controls.
The CSI300 index, which has almost doubled since late October, closed 2.2% higher.
Caution before a Bank of Japan policy decision on Thursday weighed on Japanese shares and the Nikkei 225 index ended down 0.2%.
Nonetheless, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%.
The rally in Asia came after shares in Amazon and Microsoft both jumped more than 10% on Friday on strong revenues, driving the Nasdaq Composite Index to a record high.
The dollar was up 0.2% against a basket of major currencies but still close to Friday’s 2 1/2-week low.
The Fed begins a two-day policy meeting on Tuesday with a slew of recent sub-par indicators prompting analysts to downgrade their view of the US economic outlook and to push back expectation of when the Fed will hike rates for the first time since June 2006 until later this year.
The dollar was up 0.2% at 119.18 yen and flat against the euro at $1.0872.
“It may be that the market is looking to get back into dollar longs and I think the extent to which the Fed is prepared to look through this weaker patch of data will be the important element this week,” said Ian Stannard, European head of FX strategy at Morgan Stanley in London.