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Published: Tuesday July 17, 2012 MYT 3:17:00 PM

Shares, euro edge higher on Fed stimulus talk


LONDON: European shares rose and the euro firmed on Tuesday in line with a broad rally in riskier assets due to talk that Federal Reserve Chairman Ben Bernanke may signal more monetary stimulus in testimony to the U.S. Congress later in the day.

Investors have been positioning for a more dovish tone from the Fed chairman following weak U.S. retail sales data and a cut in the International Monetary Fund's global growth forecast, which have added weight to the view that the world economy is slowing.

"For global shares to rise, investors will probably need more stimulus and an improvement in economic sentiment," said Shun Maruyama, chief strategist at BNP Paribas.

Investors will also be watching the latest ZEW German economic sentiment index due out later for an indication about the state of Europe's largest economy after recent data painted a mixed picture.

A third straight day of gains in Asian markets helped lift the MSCI world equity index <.MIWD00000PUS> 0.2 percent to 310.02 points. The FTSE Eurofirst <.FTEU3> index of top European shares opened 0.2 percent higher at 1,045.29 points.

The single currency climbed to a one-week high of $1.2314 before settling up 0.1 percent at $1.2290 as the dollar hit a one-week low against a basket of currencies <.DXY>.

Spanish bond yields crept up to around 6.82 percent ahead of a sale of up to 3.5 billion euros of Treasury bills later, which is seen as an early test of sentiment before Thursday's bond sale. - Reuters

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