Global shares push higher, bonds steady ahead

of Fed at Credence Independent Advisors

(Reuters) World stocks inched up and U.S. bond yields steadied after
almost three weeks of gains on Tuesday with Federal Reserve policy setters
expected to end six years of aggressive monetary stimulus.
The Fed kicks off a two-day meeting later with markets betting on an announcement
that it will stop its post-financial crisis high-intensity asset buying and reinforce that a
softly-softly approach will be taken to raising rates.
With the euro zone running into turbulence again and Chinas giant economy also
struggling for pace, the prospect of a world without U.S. stimulus has troubled markets
over the last couple of months, but they finally seem to be getting used to the idea.
European shares rose for the fourth time is six days, helped by better-than-expected
results from pharmaceutical group Novartis and Swiss bank UBS, while the dollar,
commodity markets and U.S. bond yields steadied.
I think in the last few days we have had a reality check, fund management group
Hermes chief economist, Neil Williams, said. The world is certainly not a happy place
at the moment but it hasnt got that much worse in recent weeks.

Im expecting the Fed to re-assert its dovishness, they havent come this far including
six years of QE (quantitative easing) to end it abruptly and leap towards a rate hike.
Londons FTSE, Germanys DAX and Frances CAC were up 0.5, 1.2 and 0.4 percent
respectively and the euro, the pound and benchmark German government bonds all
traded around recent levels.
Gold also recovered its footing after falling to its lowest in nearly two weeks, while
emerging market stocks, which are also seen as vulnerable from reduced U.S. and
global stimulus, rose 0.7 percent as hopes of more reforms of state-owned business saw
Chinese stocks jump 2 percent.
CROWN SLIPS
Swedens crown slid to a four-year low against the dollar and a four-month trough
against the euro after the countrys central bank, the Riksbank, surprised markets with
a cut in interest rates to zero.
Most analysts had forecast that the bank would lower its main interest rate, the repo
rate, to 0.1 percent from 0.25 percent to fight the risk of deflation. But it went a step
further and forecast an even lower rate path for the future.
Reading between the lines, it looks like Riksbank will keep rates low This will weigh
on the Swedish crown, with most losses likely to come against the dollar, SEBs chief
currency strategist in Stockholm, Carl Hammer, said.
In Asia, MSCIs broadest index of Asia-Pacific shares outside Japan added about 0.4
percent but Japans Nikkei dropped 0.4 percent after disappointing results from Canon
offset positive retail sales data.
In the United States, data on Monday had been far from encouraging.
Services sector activity slowed in October to a six-month low, while manufacturing
output in Texas decreased, providing more evidence that the Fed is likely to take things
slowly in the coming months.
The dollar index, which tracks the U.S. unit against six major rivals, inched up about
0.15 percent in Europe to 85.629 as early Wall Street futures prices pointed to a solid
0.4-0.5 gain for stocks later.
Among commodities, U.S. crude was flat at $81.04 per barrel after dropping as low as
$79.44 on Monday, its lowest level since June 2012, after Goldman Sachs cut price
forecasts.

Brent crude shed 0.2 percent to $85.65, as concerns about weak global demand and
ample supply kept a cloud over the market though growth-attuned metals copper,
nickel and aluminium continued their recent rebound.
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