* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
* Global equities trader higher
* Dollar fall on profit taking
* German bond yields on record low
By Atul Prakash
LONDON, Nov 25 Global equities climbed on
Friday, while the dollar retreated against major currencies as a
pullback in U.S. bond yields prompted some investors to take
profits after the currency's best run in almost two years.
The MSCI world equity index, which tracks
shares in 46 countries, was up 0.2 percent in early European
trading and headed to close the week around 1 percent higher. In
Asia, MSCI's broadest index of Asia-Pacific shares outside Japan
added 0.7 percent.
European equities were steady in morning business, with a
rally in defensive sectors such as healthcare and utilities
offsetting weaker banking and commodities stocks. The
pan-European STOXX 600 index fell 0.05 percent, but
remained on track for a third straight week of gains.
European shares have gained 4.5 percent since Donald Trump's
surprise victory in this month's U.S. presidential election.
"It looks as if the market is taking a breather after a good
run. The market view is that Trump is going to spend more and
will shield the U.S. more so that we get higher inflation and
higher domestic growth," Ronny Claeys, senior strategist at KBC
Asset Management, said.
"The market has reacted positively on Trump, but this could
change as his policies are vague at this stage. Investors will
react more on his policy details."
European energy stocks fell 0.5 percent after crude
oil prices slipped around 1 percent on rising Saudi supplies to
Asian clients and a fall in Chinese imports.
A Saudi-led plan to agree on crude output cuts from the
Organization of the Petroleum Exporting Countries (OPEC) and
other producers next week would only impact supplies from
February 2017 as most exporters sell their supplies two months
On the currency front, the euro rose half a percent to
$1.0605 after weakening as far as $1.0518 on Thursday,
its lowest point since March 2015.
Expectations of rises in U.S. inflation and interest rates
have driven the greenback to a gain of more than 6 percent in
October and November combined, its strongest performance over a
similar period since its rally in early 2015.
Most investors expect those gains to continue, but a
combination of the Thanksgiving break in the United States,
market participants' need to process corporate flows at the end
of the month and a raft of risks in the first half of December
all speak for cashing in some of those gains now.
"U.S. yields gapped higher at open but we have been unable
to hold those gains and that has encouraged some profit-taking,"
said Jeremy Stretch, head of currency strategy at CIBC in
"There is a degree of consolidation (but) there is still a
consistent bias that means the dollar will remain pretty much
supported into the Fed meeting next month. The message seems to
be to take some profit and we will be looking to go again."
In the European bond market, short-dated German government
bond yields set a new record low and were on track for their
biggest two-week fall in more than three years, highlighting
demand for top-rated assets.
Demand for German debt for use as collateral for short-term
lending in repo markets has helped drive two-year bond yields
lower this week. Jitters ahead of an Italian referendum on Dec.
4 has also bolstered demand for German bonds, regarded as among
the safest assets in the world.
(Additional reporting by Patrick Graham, Dhara Ranasinghe and
Nichola Saminather; Editing by Gareth Jones)