* Geopolitics mute trading volume
* FACTBOX on investment bank views on the French
By Vikram Subhedar
LONDON, April 10 Trading volumes were muted for
many financial market assets on Monday with investors refraining
from making big bets because of geopolitical tensions in the
Middle East and the Korean peninsula.
It is also a holiday-shortened week in much of the West.
The dollar inched towards three-week highs drawing support
from U.S. rate hike expectations while global stocks, reaching
the point where some see them as expensive, were stuck in
neutral ahead of U.S. earnings season this week.
European stocks were little changed though shares
of mining major BHP Billiton jumped more than 5 percent
after activist hedge fund Elliot Management urged the company to
pursue a spin-off of its U.S. business.
The increased geopolitical risks continued to spur investors
to move into safer assets such as government debt.
Top aides to U.S. President Donald Trump differed on Sunday
on where U.S. policy on Syria was headed after last week's
attack on a Syrian air base, while U.S. Secretary of State Rex
Tillerson warned the strikes were a warning to other nations,
including North Korea.
"The risks of a conflict have certainly grown and that
should keep the dollar supported against most Asian currencies
with hawkish comments from the U.S. central bank also helping,"
said Gao Qi, an foreign exchange strategist at Scotiabank in
The euro edged lower and France's borrowing costs hit their
highest level over Germany in six weeks as investors fretted
over the rise of far-left candidate Jean Luc Melenchon in polls
before this month's presidential vote.
Melenchon's emergence over the past week has raised the
possibility that he will square off against far-right leader
Marine Le Pen in the decisive second round in May, making the
final result far more unpredictable.
France's bond yield spread over Germany hit 70 basis points
in early trading on Monday, its highest since Feb. 27
"The market is focusing a bit too much on the extreme
possibilities, but I guess with the elections coming up so soon
some nerves are inevitable," said DZ Bank strategist Christian
Lenk. "But at the end of the day I think (the second round) will
be Macron versus Le Pen."
Global stocks have traded flat over the
past month as investors after the 10 percent rise since last
November's lows has taken valuations above long-term averages.
The MSCI AC World index trades at 16 times forward earnings,
compared to a 15-year average of about 14 times.
In commodities, oil prices rose, supported by strong demand
and uncertainty over the conflict in Syria, although another
run-up in U.S. drilling activity kept a lid on gains.
Brent crude futures, the international benchmark for
oil prices, were up 0.7 percent at $55.63 per barrel.
U.S. West Texas Intermediate (WTI) crude futures were
up 0.6 percent at $52.55 a barrel.
Spot gold was little changed.
(Additional reporting by Abhinav Ramnarayan Editing by Jeremy