* China manufacturing data shows robust activity, lifts mood
* Dollar hits 3-mth high versus yen, oil rises
By Kirsten Donovan
LONDON, April 1 (Reuters) - World equities rose at the start
of the second quarter as upbeat European and Chinese
manufacturing data fuelled optimism about the global economic
recovery, while the dollar hit three-month highs versus the yen.
The FTSEurofirst 300 index of European shares <> was
up 1 percent, and in Asia overnight the Nikkei average rose to
its highest in a year-and-a-half, buoyed by the fall in the yen.
That fall, which pushed the dollar to a three-month high
came on talk that Japanese investors will look for higher
returns abroad now that the new fiscal year has started.
Shares were up as two business surveys showed China's vast
manufacturing sector moved up a gear in March as orders climbed,
pointing to brisk first-quarter GDP growth.
HSBC's China Purchasing Managers' Index (PMI) showed
first-quarter manufacturing output expanded at the briskest clip
in the survey's six-year history.
The official purchasing managers index (PMI) rose to 55.1 in
March from 52.0 in February, beating the median forecast of 54.5
in a Reuters poll of economists.
"The data looks encouraging. The knock-on effect is in terms
of Chinese expenditure," said Justin Urquhart Stewart, director
at Seven Investment Management.
"You've seen more imports going into China as a result of a
lot of the infrastructure work being done and that impacts
directly into a lot of European companies."
Manufacturing activity in the euro zone also grew at its
fastest pace in over three-years last month, data showed.
World stocks measured in the MSCI All-Country World Index
<.MIWD00000PUS> were up 1.43 percent, having posted their fourth
consecutive quarterly gain with a 2.7 percent rise in the first
three months of 2010. U.S. stock futures <SPc1><DJc1> pointed to
a higher open on Wall Street later in the day.
The dollar hit a three-month high of 93.73 yen <JPY=> with
traders saying sentiment towards the Japanese currency is
turning bearish into the new quarter, while the euro slipped to
$1.3510, and marked a lifetime low against the Swiss franc,
still vulnerable to sovereign risks festering in the background.
Meanwhile, sterling gained, hitting a five-week high against
the euro of 88.51 pence, with traders citing an opinion poll
showing the opposition Conservatives could gain a majority in
the upcoming election, diminishing UK political uncertainty.
The pick-up in riskier assets put government bonds under
pressure. Benchmark 10-year Treasury yields <US10YT=RR> were up
half a basis point at 3.837 percent ahead of manufacturing and
labour market data, while 10-year German Bund yields <EU10YT=RR>
were just over a basis point higher at 3.104 percent.
Core European bonds were still broadly supported however, on
concerns over debt-laden Greece's funding strategy. The premium
investors demand to hold equivalent maturity Greek bonds was a
couple of basis points tigher at 346 basis points, according to
Tradeweb data, still more than twice that of Irish debt.
The Chinese data also helped spur metals higher, with copper
<CMCU3> firming to a 20-month high as improving demand sentiment
combined with fund buying helped push prices up, while Nickel
hit a near two-year high at $25,320.
Oil, meanwhile, pushed to a fresh 18-month high, bolstered
by talk of fresh inflows from investors at the start of the new
quarter, with U.S. crude for May delivery <CLc1> up over 70
cents at $84.48 a barrel, having hit an intraday high of $84.54.
The market is now awaiting non-farm payrolls data due in the
United States on Good Friday, a holiday for most markets.
Analysts polled by Reuters forecast a 190,000 job gain in
March payrolls, which would be the second monthly increase since
the recession began in December 2007. []
But there is caution in the air after Wednesday's ADP data,
used by some analysts to predict the non-farm payrolls report,
showed private-sector employers cut jobs this month.
"Despite yesterday's disappointing U.S. job report, we still
believe that better initial jobless claims last month and the
weather distortion in February should warrant a market jump in
tomorrow's highly-anticipated non-farm payroll report," Barclays
Wealth said in a note.
Ahead of that weekly jobless claims are due on Thursday at
1230 GMT, with U.S. ISM manufacturing data at 1400 GMT.
(Additional reporting by Harpreet Bhal and Dominic Lau in
London; Editing by Toby Chopra, Ron Askew)
