Global equities step back from 8 month highs

World share markets edged back from near eight-month highs yesterday with European banking stocks under pressure ahead of an auction to determine the payout on Greek credit default swaps, while a broadly firm dollar kept riskier currencies in check. The dollar is being supported by improving US economic data, which reduces the likelihood of further stimulus from the Federal Reserve. Oil prices, seen as the big risk to the global economic outlook, dipped to just below $125 a barrel after gaining $3 on Friday but no new catalysts emerged to further boost risk appetite and push stocks higher. US stocks had their best week in three months last week and European shares climbed to peaks not seen since last July after waves of central bank liquidity eased concerns about the economic outlook and risks from the Eurozone debt crisis eased. German Bunds suffered a sell-off last week on rising optimism about the global outlook and easing concerns about the Eurozone debt crisis, but they rebounded yesterday with analysts saying more good news on the global economy would be needed to push them below this year\'s lows. The political environment in Europe leading up to forthcoming French and Greek elections, as well as high oil prices and concerns about the strength of growth in Asia, are all lingering uncertainties weighing on sentiment in global markets. \"We think the [equity] rally has a bit more legs yet but there\'s no doubt that it is not going to get there in a straight line,\" Barclays Wealth Equity Strategist William Hobbs said. Hobbs singled out the healthy state of many corporate balance sheets as a key factor supporting riskier assets. \"We still think the prospects for earnings growth are reasonable. Alongside this, stock markets are very inexpensive still ... and also central banks are likely to remain helpful for a while yet.\" The FTSE Eurofirst index of top European shares opened down 0.4 per cent at 1,104.04 after climbing for the fourth straight day on Friday and hitting its highest level since before the market\'s slump in late July. European bank shares were coming under pressure as the process to settle outstanding Greek credit default insurance was being held, expected to pay out $2.5 billion (Dh9.2 billion) to holders of the protection. The MSCI world equity index, helped by good gains in Asian markets on Monday, was off about 0.1 per cent 335.61, marking a rise of over 12 per cent for the year so far. Currency markets were held in check by a generally firm dollar which has been underpinned by the Federal Reserve\'s positive outlook for the US recovery and signs its is holding off from further monetary policy easing for now. The euro was down 0.2 per cent at around $1.3150, while the dollar measured against a basket of major currencies was 0.1 per cent higher at 79.84. With Greek-related risks in the Eurozone taking a breather for now, the euro was supported against the yen, while the Federal Reserve\'s not-so-dovish outlook was giving US dollar bulls a boost, said Jeremy Stretch, head of currency strategy at CIBC World Markets. From gulfnews