(Updates prices with oil rising and emerging market shares
at 2008 high)
By Jeremy Gaunt, European Investment Correspondent
LONDON, May 19 (Reuters) - Emerging market equities hit a
new high for the year on Monday in a new bout of investor
confidence, while oil prices again pushed towards $128 a barrel.
The dollar weakened slightly and euro zone government bonds
were mixed. Wall Street looked set for a flat open.
MSCI's benchmark emerging market share index <.MSCIEF> rose
to a new 2008 high of 1246.85, some 23 percent above a Jan. 22
low, but still close to 8 percent below its all-time high from
last November.
"You can make a strong case that emerging markets are
well-placed in any scenario going forward -- many of them are
enjoying a commodities boom and many of their companies are
ridiculously cheap at current valuations," said Matthias Siller,
an investment strategist at Baring Asset Management.
Equities in general have been recovering from sharp losses
at the beginning of the year, but the MSCI emerging index is one
of the first major benchmarks to recover all losses.
Elsewhere, stocks were generally stronger. European stocks
were on a four-day winning streak with the FTSEurofirst 300
<> index of top European shares up 0.1 percent.
"The market is holding onto gains we have seen over the past
week," Achim Matzke, European stock indexes analyst at
Commerzbank, in Frankfurt.
Earlier, Japan's Nikkei stock average <> rose 0.4
percent to hit a four-month closing high.
The benchmark is now up 22 percent from the year-low hit on
March 17, but is still about 6 percent below this year's highest
point touched in early January.
It rose 50.13 points to end at 14,269.61, the highest close
since Jan. 10. The broader Topix index <> added 0.6 percent
or 8.38 points to 1,404.25.
OIL STRONGER
Oil, meanwhile, jumped higher after Chakib Khelil, president
of the Organization of Petroleum Exporting Countries, said he
did not believe OPEC would hike supply at its September meeting.
U.S. light crude for June delivery <CLc1> was up $1.11 at
$127.40 a barrel, just shy of the $127.82 record high hit last
week.
"The market still has a bullish leaning because of a weak
dollar and fuel supply concerns," said Sydney-based David Moore,
a commodity analyst at the Commonwealth Bank of Australia.
Rising oil prices, combined with gains in other commodities,
have raised concerns about global inflation, adding a new wall
of worry to the ones built around the subprime crisis and an
ailing U.S. economy.
European Central Bank President Jean Claude Trichet warned
earlier in the day that the world was experiencing an "ongoing
and very significant market correction" and said policymakers
should make price stability their top priority.
He said an accumulation of oil price rises and food price
rises was adding to inflationary pressures, adding "These are
demanding times, challenging times."
Others were more bullish. Deutsche Bank <DBKGn.DE> Chief
Executive Josef Ackermann said in a newspaper interview over the
weekend that the end of the credit crisis is getting closer and
the U.S. real estate market should recover in the second half of
the year.
DOLLAR STEADY
On currency markets, the dollar was weaker versus the euro
following last Friday's slide after a drop in U.S. consumer
confidence.
The euro <EUR=> was up slightly at $1.5592.
The dollar was steady at 72.720 against a basket of
currencies, but not far off a low since the start of the month
of 72.687 set on Friday <.DXY>.
Euro zone government bond prices were mixed. The 10-year
yield <EU10YT=RR> was up 2 basis points slightly at 4.194
percent while the 2-year <EU2YT=RR> was flat at 3.995 percent.
