GLOBAL MARKETS-Shares hit 2-week highs on upbeat U.S. data, Ukraine calm

Reuters - UK Focus

* Wall Street expected to start higher after solid durablegoods data

* European, Asian shares at two-week high as tensions fade

* Rouble hits month high as threat of sanctions diminishes

* Euro down, bonds up after ECB easing talk

* Emerging-market stocks rise, gold steadies

By Marc Jones

LONDON, March 26 (Reuters) - European and Asian sharesclimbed to two-week highs on Wednesday, with investor confidencegetting a boost from upbeat U.S. data, talk of fresh centralbank stimulus and diminishing concern over Ukraine.

After a difficult few weeks in which tension between Russiaand the West amplified jitters about the Chinese economy andU.S. interest rates, investors appear to be regaining theircomposure.

Wall Street was expected to open higher for a second dayrunning, as a rise in durable goods figures joined reassuringreadings on consumer confidence and the housing market. A PMI report is due at 1345 GMT.

European stocks, meanwhile, were establishing asecond day of gains. London's FTSE rose 0.5 percent,Germany's DAX 1.5 percent and France's CAC 1.1percent. Several key emerging markets also rose.

The economic data from the U.S. over the last week hasbolstered the view that softness earlier this year was caused bybad weather, not inherent economic weakness.

Risk appetite has also been strengthened by perceptions thattension over Ukraine is easing. U.S. President Barack Obama andhis allies agreed on Tuesday to hold off on economic sanctionsunless Moscow goes beyond the seizure of Crimea.

Investor (Other OTC: IVSBF - news) relief was palpable in Russia. Moscow's main stockmarket rallied more than 2 percent and the rouble firmed to pre-Crimea-crisis levels a day after itsbiggest gain in 1 1/2 years.

"Looking at Ukraine, it doesn't fell like a systemic risk atthe moment," said Neil Williams, chief economist at London-basedfund manager Hermes.


The MSCI emerging equities index saw its biggestrise in almost three weeks, helped by the recovery in Russianstocks and in Poland and Hungary. Both had beenhit by the recent turbulence.

Despite the uncertainty of local elections this weekend,Turkish stocks jumped almost 3 percent. Indian shares also reached a record high and the rupee rose to itshighest in eight months on hopes of a rebound in foreigninvestment.

"We are seeing some consolidation in emerging markets," saidThu Lan Nguyen, an emerging FX strategist at Commerzbank (Xetra: CBK100 - news) inFrankfurt. "This has a lot to do with global risk sentiment onthe back of the situation in Ukraine and the conflict withRussia. People are somewhat relieved the sanctions have notescalated."

Among the major currencies, the focus was on what appears tobe an increasingly divergent outlook for monetary policy in theU.S. on one hand and Europe and Japan on the other.

The euro softened to $1.3794 against a broadlystronger dollar and the region's bonds saw their yieldsfall. Both were being pushed down by Tuesday's talk ofunconventional easing by some of the European Central Bank'snormally more conservative members.

The dollar got an extra push as James Bullard, president ofthe Federal Reserve Bank of St. Louis, bolstered last week'ssuggestion from the Fed that U.S. rates may rise in spring nextyear, saying in Hong Kong the U.S. outlook was "quite good."


Despite this week's rebounds, world shares are heading for their worst start to a year since the early daysof the global financial crisis in 2008.

Hopes that Beijing will take steps to bolster its economyunderpinned Chinese shares and many markets linked to China onWednesday. Brazil and Australia were among the beneficiaries,along with a host of commodities.

Following a recent run of disappointing data, manyeconomists now expect China's growth to miss the government'starget of 7.5 percent this year in the absence of effectivesupport measures.

Mainland Chinese shares dipped slightly overnightbut remained not far from a one-month high, even as rumours ofinsolvency led to a run on small banks.

"Investors are betting on stimulus because Chineseauthorities have done everything they could to achieve thetarget in the past," said Sho Aoyama, senior market analyst atMizuho Securities.

The Australian dollar rose to a four-month high of $0.9241. Other major currencies were stuck in well-worn ranges,with the yen changing hands at 102.40 yen to the dollar.

Precious metals steadied. They had lost some of their allureover the last week as concern over Ukraine declined and U.S.short-term rates rose. Gold climbed back to $1,311.60 per ounce from a five-week low of $1,305.59 on Tuesday. Silverrecovered from a seven-week low to $19.98 per ounce. (Additional reporting by Alistair Smout in London and HideyukiSano in Tokyo; Editing by Larry King)

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