* Equities rise on upbeat economics, earnings
* Euro gains on inflation pressure
* Egypt keeps Brent oil above $100
By Jeremy Gaunt, European Investment Correspondent
LONDON, Feb 1 (Reuters) - Investors shifted their focus from
Middle East turmoil to concentrate on improved economic data and
corporate results on Tuesday, lifting global stocks.
Wall Street looked set to join in and open higher.
Inflation expectations boosted the euro, helping drive the
dollar to a 12-week low against a group of other currencies.
The price of oil, the most sensitive indicator of market
unease about Egypt, eased, although Brent crude remained a few
cents above $100 a barrel.
Egyptians were protesting en masse, demanding an end to the
30-year-rule of President Hosni Mubarak.
Oil dipped, however, on news of China's factory growth
cooling to a five-month low, signalling demand may rise more
slowly in the world's second-largest oil user.[]
The Egyptian crisis has prompted bursts of risk aversion on
financial markets over the past few days but investors on
Tuesday were trading on expectations of better prospects for the
world economy.
Manufacturing activity in the euro zone accelerated more
than previously thought in January, indicating the sector is
regaining momentum across most of the region with the notable
exception of Greece. []
Investors were earlier encouraged by upbeat U.S. Midwest
factory activity and consumer spending figures on Monday.
"There is confidence in the market as companies are
reporting good figures," said Heinz-Gerd Sonnenschein, equity
markets strategist at Deutsche Postbank in Bonn.
German chipmaker Infineon <IFXGn.DE>, for example, raised
its full-year outlook, anticipating strong demand from the
automotive and industrial sectors.
Credit Suisse, meanwhile, upgraded Greek equities to
"benchmark" from "underweight", citing cheap equity valuations
and a range of supportive macroeconomic factors. Athens' leading
share index <> gained 12.7 percent last month after being
battered during the debt crisis.
World stocks as measured by MSCI <.MIWD00000PUS> gained half
a percent, with Europe's FTSEurofirst 300 <> up 0.8
percent.
Japan's Nikkei <> earlier closed up 0.36 percent.
Developed market stock indexes are generally in positive
territory for the year. By contrast, Citi reported that most
core government bonds lost money in January.
DOLLAR FALLS
The dollar fell to a 12-week low against a basket of
currencies, driven lower as the euro extended gains in the wake
of above-forecast inflation data.
The dollar index <.DXY> fell to its weakest since early
November.
The euro rallied to its highest against the dollar in more
than two months. It was at $1.3735 <EUR=>, buoyed by the view
that euro zone interest rates would rise before U.S. rates.
"Relative rate spreads are still favouring the euro to the
dollar," said John Hydeskov, currency strategist at Danske.
"Pressure has intensified for the ECB to do something about
inflation when it meets on Thursday."
Demand for euro zone government debt fell, pushing up
longer-term yields.
The premium investors demand to hold lower-rated euro zone
government bonds rather than German debt fell, after the release
of the PMI and better-than-expected details of Spanish savings
banks' exposure to property and bad loans.
(Additional reporting by Harpreet Bhal and Naomi Tajitsu;
editing by Stephen Nisbet)
