Market Data 
By Tom Westbrook and Alun John
SINGAPORE/LONDON (Reuters) -European shares drifted on Tuesday, failing to build on the previous day’s gains driven by China stimulus hopes, which only generated limited traction in Asia, while the Australian dollar slid as the central bank hinted rate cuts were finally near.
The main scheduled events of the week are still to come, however, with U.S. inflation data due on Wednesday, and a meeting by the European Central Bank on Thursday. With an ECB rate cut all but certain, investors will be watching for clues about its policy path.
Also top of mind for investors in emerging markets was Brazilian President Luiz Inacio Lula da Silva undergoing surgery in Sao Paulo to drain a bleed on his brain linked to a fall at home in October, according to a medical note published by the government.
MSCI’s world share index was down 0.14% with Europe’s broad index off 0.1%, walking back some of its gains from the previous day when news from China’s Politburo drove hopes of more accommodative policy in the world’s second-largest economy. ()
Chinese state media outlet Xinhua reported on Monday that top Communist Party officials had shifted the monetary policy stance from “prudent” to “moderately loose” ahead of the target-setting Central Economic Work conference this week, mirroring their response in previous crises.
Chinese bluechips,, which had closed before Monday’s announcement, rose 0.7% on Tuesday as did stocks in Japan and Korea, the latter up 2.4% helped by authorities’ vowing measures to stabilise markets in a bid to calm investors spooked by political turmoil. () [.SS] ()
Though Hong Kong stocks, which had a chance to react to the news on Monday, dipped on Tuesday, and the runaway rally in Chinese bonds, which extended on Tuesday to drive 10-year and 30-year yields to record lows, suggests some investors doubt the pledges are going to lift long-run growth in China.
Soft Chinese trade data on Tuesday didn’t help.
The Politburo meeting announcement, as it related to the policy stance, “adopted (the) strongest tone in decades,” said Chen Shujin, head of China financial and property research at Jefferies.
However, she added: “We still see the market repeating the pattern from the beginning of the year, driven by expectation on potential stimulus, and dragged by lower-than-expected policies.”
Overnight, the fell 0.6% and futures were steady in the run up to Tuesday’s open. [.N]
A 2.5% drop for chip titan Nvidia (NASDAQ:), which edged a fraction lower still in after-hours trade following China opening an antitrust investigation, weighed on the mood.
CENTRAL BANKS
Elsewhere, the Reserve Bank of Australia, which has yet to join the global rate cutting cycle, left its cash rate unchanged at 4.35% as expected.
However, the Australian dollar fell 0.7% to $0.6394 as Governor Michele Bullock left the door open to a cut in interest rates as early as February. [AUD/]
“The currency must now count on soft U.S. CPI tomorrow for buyers to return,” said Kenneth Broux, head of corporate research FX and rates at Societe Generale (OTC:).
That U.S. price data is the most important piece of global economic data this week. It is the last scheduled event that could possibly disrupt market expectations that the Federal Reserve will cut rates at its meeting next week.
Core inflation is expected to hold at 3.3% for November, and an in-line reading should be no impediment to an easing.
U.S. 10-year benchmark Treasury yields were 3 basis points higher.
Traders are also expecting rate cuts in Europe and Canada later this week and are leaning towards a 50 basis point cut in Switzerland as authorities may like to tap the brakes on the franc’s relentless rise against the euro.
The euro dipped 0.2% on the dollar to $1.05255, and was a fraction weaker on the franc at 0.9260 francs. The Japanese yen, which was the best-performing G10 currency in November as expectations have grown for a December rate hike in Japan, was weaker at 151.64 per dollar. [FRX/]
Positioning data shows speculators flipped to a long yen position last week for the first time in more than a month.
Oil prices slipped on Tuesday as concerns eased about the potential regional fallout from Syrian President Bashar al-Assad’s overthrow, but the China news gave some support.
futures were down 0.26% at $71.95 a barrel. [O/R]
Gold rose 0.7% to $2,677 an ounce while bitcoin fetched $97,400. [GOL/]
