Stocks set for first week of gains in three, euro climbs

The MSCI World Index, which tracks shares in 47 countries, was up 0.1 percent, set for a 1 percent gain this week. Its climb was underpinned by modest gains in Europe and Asia.

Emerging stocks .MSCIEF were up 0.2 percent and the pan-European STOXX 600 was up 0.1 percent. .STOXX50

Surveys on Thursday covering Europe’s services and manufacturing industries outshone the most optimistic forecasts in Reuters polls, with factories having the second-best month in the index’s history.

“It’s a bit of a Goldilocks situation (for economic growth). It is finely balanced and I think the European Central Bank has very much hinted at that in its actions, but at the moment I can’t really see how this is going to be up-ended,” said Ken Odeluga, market analyst at City Index.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.2 percent, as Hong Kong shares .HSI bucked the softness in mainland Chinese shares to gain 0.6 percent.

Stocks in mainland China dropped to three-month lows after big falls the previous day on concerns about fresh government steps to curb financial risks and rise in Chinese bond yields.

Japan's Nikkei .N225 ended up 0.1 percent after a market holiday on Thursday while U.S. stock futures ESc1 were little changed after shortened trading on Thursday.

In the currency market, the U.S. dollar remained under pressure after the minutes from the U.S. Federal Reserve’s latest policy meeting highlighted concern among some of the board members over persistently low inflation. The index that measures the greenback against a basket of peers was 0.2 percent lower. .DXY

The euro EUR= hit its highest in nearly two months at $1.1875 and was on track to mark its third consecutive week of gains despite failure of coalition talks in Germany earlier this week.

The leader of country’s Social Democrats is coming under growing pressure to drop his opposition to a new “grand coalition” with Chancellor Angela Merkel’s conservatives, with senior politicians arguing the party had a duty to promote stability.

A weaker dollar saw the British pound staying near a six-week high against the dollar ahead of British Prime Minister Theresa May’s visit to Brussels later in the day for talk on Brexit.[GBP/]

CHINA CONCERNS

Although solid global economic growth and strong corporate earnings have underpinned shares in Asia and many other parts of the world, a tumble in mainland Chinese shares caught some investors’ attention.

The CSI300 index .CSI300 fell as much as 0.9 percent to a three-month low in choppy trade after a 3.0 percent fall - its biggest in almost a year-and-a-half - on Thursday, as a sell-off in domestic bonds that has been underway since last month gnawed away at investor sentiment.

In late trade, the index was almost flat.

Investors were also reacting to new policies aimed at curbing micro-lending and tightening regulation of asset management businesses.

The start-up board Chinext Index hit its lowest level since mid-August and last stood down 0.3 percent, ahead of potential swell in selling of small shares in the next couple of months from institutional investors after their IPO (Initial Public Offering) lock-up period ends.

Earlier this month Chinese stocks had risen almost 15 percent from their lows hit in May, and analysts said some investors were selling to lock in profits.