LONDON, Jan 17 (Reuters) - European shares recovered from
Friday's losses on Monday as investors focused on company
earnings and U.S. Federal Reserve policymakers entered a quiet
period ahead of their meeting next week.
Stock market moves in Asian trading were small and economic
data from China was mixed: industrial output picking up but
retail sales missed expectations.
China's central bank unexpectedly eased policy by cutting
rates on medium-term loans.
Analysts expect more policy easing as growth in the world's
second-largest economy has shown signs of slowing from its rapid
rebound after the COVID-19 slump.
At 1321 GMT, the MSCI world equity index,
which tracks shares in 50 countries, was flat. Europe's STOXX
600 was up 0.6%, having recovered most of Friday's losses
Markets in the United States are closed for a public
holiday, but S&P 500 futures were up 0.2% and Nasdaq
futures up 0.1%.
Expectations of central banks tightening policy to combat
persistent inflation have meant that equities have generally
struggled to make gains so far this year and investors are
rotating from growth to value stocks.
Investors are focused on company earnings, which will need
to be strong to prevent further losses. Goldman Sachs,
BofA, Morgan Stanley and Netflix report
earnings this week.
Marija Veitmane, senior multi-asset strategist at State
Street Global Markets, said that she would be looking to see how
much the costs of higher prices and labor shortages have
affected corporate profits, as well as how companies will spend
the money on their balance sheets.
"One thing that was a very positive surprise for us last
year, particularly towards the end of the year, was the strength
of corporate margins," Veitmane added.
"Corporates were able to pass higher costs to the end
consumer and that was really encouraging news for us. That's
exactly what we'll be looking for this time around."
The U.S. Federal Reserve meets on Jan. 25-26 and investors
expect a cycle of rate hikes to begin in March. Rate hikes tend
to harm riskier assets such as equities.
Speculators' net bearish bets on benchmark U.S. 10-year
Treasury note futures have swelled to their largest since
February 2020, just before the onset of the pandemic, according
to Commodity Futures Trading Commission data released on Friday.
The yield on the 10-year U.S. Treasury yield hit a two-year
high last week. The implied yield from futures rose to 1.85%
early on Monday.
The U.S. dollar index was up 0.1% on the day at 95.329
, clinging to its recent bounce. The euro was at $1.1396
Ahead of a Bank of Japan policy meeting concluding on
Tuesday, the dollar was up 0.3% against the yen, at 114.555
Euro zone government bond yields edged higher, with the
benchmark German 10-year yield at -0.034%.
Brent crude futures hit their highest in more than three
years as investors bet supply will remain tight amid restrained
output by major producers, with global demand unperturbed by the
Omicron coronavirus variant.
Bitcoin was a touch lower, around $42,637.
(Reporting by Elizabeth Howcroft; Editing by Pravin Char and