* European shares on track to post best qtr in nearly 10 yrs
* World stocks up 18 pct in Q3 after 21 pct rise last qtr
* Commodity prices firm, dollar falls
By Dominic Lau
LONDON, Sept 30 (Reuters) - European shares look set to
finish the third quarter with their best performance in nearly a
decade on expectations of economic recovery while world stocks
also rose strongly though not as much as in the previous period.
The pan-European FTSEurofirst 300 <> index put on 0.5
percent on Wednesday and the MSCI world index <.MIWD00000PUS>
added 0.7 percent, while commodity prices were also firmer,
helped by a weaker dollar.
Equities have been rallying hard since early March as
investors have become more confident about economic recovery.
German unemployment fell for a third consecutive month in
September. U.S. non-farm payrolls data is due on Friday and will
do much to dictate market direction in the short-term before the
third quarter company earnings seasons gets into gear.
The European benchmark index is up 18.5 percent in
July-September, on course to record its biggest quarterly rise
since December 1999. It rose nearly 16 percent in the previous
quarter but is still 38.4 percent below its peak in mid-2007.
Global stocks gained 17.9 percent this quarter after rising
more than 21 percent in April-June, its best ever quarterly
rise, while Britain's FTSE 100 <> was set to register its
best quarterly gains since the index was launched in 1984.
"The next big hurdle for the market to overcome could be the
third quarter reporting season. If it is as supportive as the
second quarter was and allowed brokers to continue to be
aggressive in terms of their upgrades, then certainly we have
potential to add to this (rally)," said Henk Potts, equity
strategist at Barclays Stockbrokers.
U.S. stock index futures <DJc1> <SPc1> <NDc1> were up 0.4
percent, pointing to a firmer start for Wall Street. The S&P 500
<.SPX>, up 15.4 percent so far this quarter, is making a run for
its best quarterly performance since the last quarter of 1998.
The corporate outlook has showed signs of revival, with the
world economy recovering from its worst recession since the
1930s Great Depression.
British retailer Marks & Spencer <MKS.L> on Wednesday posted
an improvement in its quarterly sales trend and raised its
forecast for full-year profit margin, but cautioned 2010 was
likely to be a tough year. []
The International Monetary Fund on Wednesday lowered its
estimate for global writedowns for banks and other financial
institutions to roughly $3.4 trillion from $4 trillion but
warned that loan losses were set to rise as unemployment and
associated delinquencies increase. []
DOLLAR WEAK
Crude prices <CLc1> were higher, rising near $68 a barrel as
the dollar eased, with investors focusing on Iran's nuclear
plans.
Metal prices also stayed firm, helped by the weaker dollar.
Gold <XAU=> rose above $1,000 an ounce and was poised to post
its best quarterly performance since the first quarter of 2008.
The U.S. dollar <.DXY> slipped against major currencies on
month- and quarter-end buying lifting sterling and the yen. The
greenback was down 0.7 percent at 89.51 yen.
The euro <EUR=> extended gains against the dollar after the
European Central Bank allotted just 75 billion euros of one-year
funds at its second such tender, considerably less than the
market was expecting.
It suggests banks may now have greater confidence in their
liquidity needs and are no longer as dependent on the ECB for
funding. []
"The economy has turned a corner and the bottom line is that
central banks are making the first tentative steps towards
unwinding the emergency liquidity programmes, and maybe the ECB
will do so in the next few months as well," said Kenneth Broux,
finanical markets economist at Lloyds Banking Group in London.
Yields on benchmark 10-year U.S. Treasuries <US10YT=RR> were
up 3 basis points at 3.320 percent, while the 10-year euro zone
Bund <EU10YT=RR> yield was up 2 basis points at 3.239 percent.
(Additional reporting by Atul Prakash and Jamie McGeever in
London, editing by Mike Peacock)
