2011 kicks off on high trading note

NEW YORK – World stock markets yesterday were higher on the first trading day of 2011, with investor confidence boosted by signs that China’s efforts at keeping a lid on inflation may be working.

Oil prices rose to near US$92 a barrel in Asia as traders mulled how high crude can go before it sparks inflation. In early European trade, France’s CAC-40 rose 1,2 per cent and Germany’s DAX added 1,2 per cent. Wall Street was set to open higher, with Dow futures up 0,6 per cent. Broader S&P futures gained 0,6 per cent. Hong Kong’s Hang Seng index rose 1,7 per cent, while South Korea’s Kospi rose 0,9 per cent. In currencies, the dollar was higher against the yen and the euro. It rose 0,6 per cent against the yen to 81,35. The euro fell 0,8 per cent to 1,3272. Closer to home, the rand touched a near three-and-a-half year high against the dollar, backing the case for another interest rate cut in South Africa later this month. The rand briefly went to R6,55/dollar, its strongest level since mid-August 2007. Gold rose above US$1 420 an ounce in Europe, within one per cent of its record high, and silver and palladium hit multi-year peaks, driven by pent-up demand on the first trading day of 2011.Pradeep Unni, a senior analyst at Richcomm Global Services in Dubai, said fresh highs in gold were likely this year, with an initial target seen at US$1 455 to US$1 480, after trade in the metal was becalmed over the Christmas holidays.’The fundamentals are driving the price, and those fundamentals remain fear-driven,’ he said.’Gold [steps] into the New Year with all its current fundamentals intact … sovereign debt risk, macro uncertainty, concerns over currency stability, medium-term inflation fears as the US Federal Reserve implements Quantitative Easing II, geopolitical tensions and low interest rates.’US copper futures rallied one per cent to a record US$9 904 a tonne, extending 2010’s 33 per cent gains on expectations of sustainable growth in top metal consumer China.Copper ended 2010 around record highs just short of US$10 000 a tonne on the London Metal Exchange, with analysts looking for prices to rise by another ten per cent in 2011 as consumers contend with a shortfall of metal estimated by Barclays Capital of more than 800 000 tonnes or almost four per cent of forecast output this year.’There is limited supply of copper, and there is fund money coming to the market pushing it higher. At the same time, the natural short sellers – the miners – are not playing ball,’ a trader with an international bank in Singapore said.- Nampa-Reuters-AP-AFP