January 17, 2020 / 8:17 PM / 2 months ago

GLOBAL MARKETS-Shares set fresh records, lifted by U.S. housing data

(New throughout, adds gold, oil settlement prices)

* MSCI world index, Wall Street and Europe indexes hit records

* China 2019, Q4 GDP growth in line with expectations

* U.S. housing starts at 13-year high

By Herbert Lash

NEW YORK, Jan 17 (Reuters) - Key world equity indexes scaled new highs on Friday as a surge in U.S. housing starts to levels last seen in 2006 powered stocks while the greenback rose to a one-week high against the euro on expectations of solid economic growth.

Optimism over corporate earnings and indications of resilience in China's economy also lifted equities and pushed government debt yields higher.

U.S. housing starts jumped 16.9% to a seasonally adjusted annual rate of 1.608 million units in December, a 13-year high.

MSCI's gauge of stocks across the globe gained 0.21%, its fifth straight day of new highs.

The resurgent U.S. economy, backed by an accommodative Federal Reserve, is bringing investors off the sidelines back into the market, said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co in Milwaukee.

An improving economy also is reducing the fear of being the last person to invest before a recession, Schutte said.

"Those people are now coming back into the market because recession fears are diminishing," he said. "When you look out there and you have a 10-year Treasury at 1.8% and you have the economy turning around, where are you going to put your money?"

European shares touched a record high, as the broad pan-European STOXX 600 index rose 0.92%.

The three main indexes on Wall Street also hit records.

The Dow Jones Industrial Average rose 8.47 points, or 0.03%, to 29,306.11. The S&P 500 gained 3.63 points, or 0.11%, to 3,320.44 and the Nasdaq Composite dropped 5.50 points, or 0.06%, to 9,351.63.

Emerging market stocks rose 0.37%.

China stocks rose as investors cheered further signs of resilience in the Chinese economy and the signing of the Sino-U.S. trade deal.

China's economy grew 6% in the fourth quarter, data that reinforced signs of improving business confidence, though anemic domestic demand and the trade war slowed the growth rate to 6.1% in 2019, the slowest in 29 years.

Both the blue-chip CSI300 index and the Shanghai Composite Index gained 0.1%.

The safe-haven Japanese yen weakened as the record-setting rally in stocks showed strong risk appetite.

The dollar index rose 0.31%, with the euro down 0.4% to $1.109. The yen weakened 0.01% versus the greenback at 110.18 per dollar.

Oil prices edged higher on concerns that slower growth in China could dent fuel demand.

Brent crude futures rose 23 cents to settle at $64.85 a barrel. U.S. West Texas Intermediate futures settled up 2 cents at $58.54 a barrel.

Most euro zone bond yields were flat, with Germany's 10-year yield falling to -0.25%, below two-week highs around -0.17%.

Benchmark 10-year notes last fell 7/32 in price to push their yield up to 1.832%.

Longer-term yields also may have risen because of Thursday's announcement the U.S. Treasury will begin issuing a new 20-year bond in coming months as it seeks to plug budget deficits expected to top $1 trillion annually.

U.S. gold futures settled up 0.6% at $1,560.30 an ounce.

Reporting by Herbert Lash, editing by Chizu Nomiyama, Nick Zieminski and David Gregorio

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