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Global markets push higher after week darkened by terror
[NEW YORK] Global stock markets pushed higher on Friday to end a nervous week during which investors demonstrated a feisty resilience amid a cloud of terror.
A deadly attack on a hotel in Bamako, Mali on Friday by a jihadist group that left at least 27 dead, just one week after the devastating attacks on Paris, added to fears that Islamic extremists were seeking to exploit vulnerabilities in many countries.
But investors appeared unfazed and more inspired by signs from the Federal Reserve of confidence in the strength of the US economy, and of willingness to ease monetary policy even more from the European Central Bank.
After a series of worrisome reports from US retailers last week, raising concerns about the Christmas shopping season, updates from other stores and chains this week were more positive - including a solid dividend hike by Nike on Friday - helping to buoy Wall Street.
In US trade, the broad S&P 500 closed Friday up 0.4 per cent for a 3.3 per cent gain for the week.
In Europe, the blue-chip EuroStoxx 50 added 0.1 per cent for the day and 2.7 per cent in the week.
And in Japan, a 0.1 per cent gain Friday brought the week's rise to 1.4 per cent, hitting a three-month high despite the central bank's refusal to undertake more stimulus measures in the face of the economy's return to recession.
While attacks by the Islamic State group and others spurred fears especially across Europe, they did not have much impact on currencies or commodities.
Oil prices were largely unchanged in the week, with the US benchmark WTI crude testing the low threshold of US$40 a barrel several times without holding below it. The dollar pushed higher against the euro - going below the US$1.07 level for most of the week - but that was mostly on the diverging prospects for monetary conditions in both, the US tightening and Europe easing.
Still, there was some concern that markets may be overpriced.
"We're seeing some profit taking," said analyst Craig Erlam at traders Oanda during Friday's session. "They've been on a good run since October and it's perfectly reasonable that traders will ... lock in some profits." "I am not entirely sure why we're more optimistic," said FTN Financial's Chris Low after the strong week in US markets. But he noted that the Fed's pledge to increase interest rates very slowly if the first hike does come in December as an important factor.
Minutes from the Fed's October meeting released during the week showed most policy makers confident in the economy after a few months' doubts, and ready to begin raising rates next month.
Since then they have repeatedly stressed the curve for rate hikes will be very flat, given the lack of any sign of inflationary pressures.