NEW YORK, Feb 14, (Agencies): World stocks climbed towards last week’s 30-month high on Monday as talk of slower-than-expected Chinese inflation eased fears of policy tightening and the euro fell on worries about European banks. US crude oil rose above $86 a barrel, rebounding from a 10-week low set last week as protests in Yemen, Iran and Algeria highlighted the potential for unrest to disrupt oil supplies. Concerns about political uncertainty in the Middle East also pushed prices of safe-haven gold higher. The euro dropped to a three-week low of $1.3428 on trading platform EBS on concerns surrounding the fate of German lender WestLB. It last traded down 0.6 percent at $1.3466. German financial regulator BaFin is involved in talks about the restructuring of WestLB as the bank struggles to come up with a rescue deal, sources told Reuters. European finance ministers assessed ways of strengthening their 440 billion euro rescue fund on Monday, but Germany remained reluctant to bolster the facility known as the EFSF without commitments on closer economic coordination. “We have some serious questions over what’s going to happen with the EU meeting this week and whether or not they will come to any kind of conclusion on the EFSF,” said Andrew Busch, global currency and public policy strategist at BMO Capital Markets in Chicago. Weakness in the euro helped push the US dollar index, which measures the greenback versus a basket of major currencies, to a three-week high of 78.873. Financial markets showed a muted reaction to President Barack Obama’s budget proposal that would cut the US deficit by $1.1 trillion over 10 years and set the stage for a bitter fight with Republicans who want tougher spending controls. See “The proposal today puts fiscal policy back on the agenda and that is something investors tend to like,” said Marc Chandler, head of currency strategy at Brown Brothers Harriman in New York. The MSCI world equity index rose 0.3 percent, having hit its highest level since August 2008 last week. Thomson Reuters’ global stock index gained 0.4 percent. US Stocks were mixed in midday trading as investors weighed the impact of President Barack Obama’s budget proposal for the next fiscal year. Obama unveiled a $3.73 trillion budget Monday that includes a five-year freeze on many domestic spending programs. The White House contends the budget plan for the fiscal year beginning Oct. 1 puts the government on course to cut deficits by about $1.1 trillion over the coming decade. Republicans and Democrats have sparred over how much spending to cut. The worry is that slashing spending could imperil the economic recovery. Bond prices held steady after details of the budget proposal were revealed. The yield on the benchmark 10-year Treasury note was 3.62 percent, slightly lower than late Friday. A jump in Treasury bond yields would suggest that investors see US debt as increasingly risky. Wal-Mart Stores Inc dropped 1.4 percent after analysts at JPMorgan downgraded the company. Wal-Mart was the weakest stock among the 30 that make up the Dow Jones industrial average. MGM Resorts International Inc fell 3.5 percent after reporting a loss of $139 million last quarter, a little less than analysts had expected The Dow fell 18 points, or 0.1 percent, to 12,255. The S&P 500 rose less than a point to 1,329. The Nasdaq composite gained 6 points, or 0.2 percent, to 2,815. Stocks ended last week with a moderate gain after the resignation of Egyptian president Hosni Mubarak. The Dow rose to its highest close since June 2008. Europe European shares hit a 29-month closing high on Monday, with miners up after Chinese trade data highlighted strong demand for raw material and as talk of easing inflation in the country capped fears of further tightening. The pan-European FTSEurofirst 300 index of top shares closed 0.3 percent higher at 1,177.86 points, its highest close since early September 2008. The index, up 3 percent this month, has rebounded almost 83 percent since hitting a record low in March 2009. Miners in the STOXX Europe 600 basic resources index rose 1.6 percent as copper prices neared record highs after data showed a fall in China’s trade surplus to a nine-month low, following surprisingly strong imports, notably of copper. “The import data reaffirms the growth story in China and helps to give confidence in mining companies that interest rate rises are not going to suppress metal demand in the medium term,” said Joshua Raymond, market strategist at City Index. Traders also said there was talk China’s consumer price index (CPI) may have risen 4.9 percent in the year to January, well below the forecast of 5.3 percent, adding that might be because of weighting changes in the CPI. “Inflation has been the major worry and there has been a fear of monetary overkill, but until the (inflation) data is released (on Tuesday) we could see a bit of volatility,” said Heino Ruland, strategist at Ruland Research in Frankfurt. Share price gains were kept in check by falls in heavyweight banking stocks ahead of sector earnings results due this week. Societe Generale and BNP Paribas, which report this week, both shed around 1.2 percent while Lloyds Banking Group fell 1.7 percent. Bucking the trend, Credit Suisse gained 1.9 percent after the Swiss bank said it will issue 6 billion Swiss francs ($6.2 billion) of contingent convertible capital bonds, or CoCos, to satisfy stricter capital rules. ARM Holdings rose 6.6 percent as traders cited bullish notes from Goldman Sachs and Morgan Stanley on its outlook. Nearly all the world’s mobile phones and tablets use the company’s low-power technology. UK Britain’s leading share index closed marginally lower on Monday, as weaker financials prevailed over a mining rally inspired by upbeat economic data from China. Chip designer ARM Holdings was the top riser, up 6.6 percent, with traders citing favourable broker comment as the mobile world met in Barcelona. Goldman Sachs said ARM’s management underscored its bullish view of the company’s long-term opportunities, adding “there’s clearly room for ARM’s royalty rate (from licence agreements) to increase over the next five years”. Morgan Stanley, meanwhile, said “tablet demand is still underappreciated” by the market. Nearly all the world’s mobile phones and tablets use ARM’s low-power technology. The FTSE 100 closed down 2.81 points, or 0.1 percent, at 6,060.09, having hit a 2-1/2 year-high earlier. Banks and insurers were weaker as concerns over Europe’s debt situation and the precariousness of global recovery remained in focus. Lloyds Banking Group fell 1.6 percent, while Barclays, which kicks off the reporting season with full-year results on Tuesday, shed 0.1 percent. Data suggested Portugal headed back into recession in the last quarter of 2010. “The yield on Portugal’s 10-year government bond reached a new high above 7 percent, and Spain’s yield ticked higher, reminding the market the European debt crisis is by no means over,” Angus Campbell, head of sales at Capital Spreads, said. US President Barack Obama proposed a budget on Monday that would cut the US deficit by $1.1 trillion over 10 years, setting the stage for a bitter fight with Republicans who want even tougher spending controls. Asia Asian stock markets regained their gumption Monday as the resignation of Egypt’s president eased worries over political instability in the Arab world while indicators later this week are expected to show the US economic recovery still on track. Tokyo’s Nikkei 225 stock average climbed 0.8 percent to 10,691.14 — unfazed by confirmation from Japan’s government that China’s economy surpassed its own as the world’s second largest in 2010. And while gross domestic product shrank at an annualized rate of 1.1 percent in the October-December quarter, the contraction wasn’t as bad as forecast. Hong Kong’s Hang Seng index added 1.1 percent to 23,080.69 and China’s Shanghai Composite index was up 1.8 percent at 2,876.81. Elsewhere, Australia’s S&P/ASX index climbed 1.1 percent at 4,935.50. South Korea’s Kospi gained 1.9 percent to 2,013.11. Shares in New Zealand, Singapore and Taiwan were all higher. Oil Brent crude oil rose towards $103 a barrel on Monday, supported by concern about unrest in the Middle East after last week’s ouster of President Hosni Mubarak and rising crude imports in world No. 2 oil consumer China. Protests in Yemen, Iran and Algeria highlighted the potential for unrest to cause oil supply disruptions. The Middle East and North Africa are together the source of more than a third of the world’s oil. “We’re staying up because of the continued risk of further unrest in the Middle East,” said Christopher Bellew, a broker at Bache Commodities in London, adding the Chinese data was also supportive. Brent crude, the benchmark in Europe, Africa and the Middle East, for April delivery was up $1.86 to $102.80 at 1453 GMT. The events in Egypt helped push Brent above $100 at the end of last month for the first time since 2008. US crude, also known as West Texas Intermediate or WTI, for March was up 1 cent at $85.59. It fell as low as $85.10 on Friday, the lowest intraday price in 10 weeks. The premium of Brent to US crude reached a record $16.24 on Friday, the last day of trading for the March Brent contract. The spread between the April contracts was around $12 on Monday. US crude has been weighed down by near-record inventories at the Cushing, Oklahoma delivery point, while a steady fall in North Sea supplies — the physical basis for the Brent contract — has supported the European marker. Currencies The European single currency fell against the dollar Monday on eurozone debt jitters before a key finance meeting in Brussels and was also hurt by falling industrial production in the bloc. Traders also speculated over the next head of the European Central Bank (ECB) and outlook for the region’s interest rates. The euro came under pressure late last week from news of the resignation of Germany’s central bank chief Axel Weber, confirming he is no longer in pole position to become the next ECB chief. The German government said on Monday that a new German candidate was possible. Meanwhile in the run-up to the Brussels meeting, markets were also jarred by speculation over the struggling German regional lender WestLB. “The euro was vulnerable early in the session on the overhang of (eurozone) peripheral debt concerns which were evident last week and also on elevated uncertainty as to who will take the helm of the ECB in October,” said Rabobank analyst Jane Foley. “This meant that the speculation regarding the rescue of WestLB ... hit (the euro) hard.” In London on Monday, the euro changed hands at $1.3466 against $1.3567 in New York late Friday, at 112.23 yen (113.26), £0.8406 (0.8452) and 1.3097 Swiss francs (1.3144). The dollar stood at 83.34 yen (83.48) and 0.9725 Swiss francs (0.9688). The pound was at $1.6017 (1.6053).

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