G20 growth promise keeps shares near 9-month high

By Marc Jones

LONDON (Reuters) - World shares held near nine-month highs on Monday after G20 finance chiefs said over the weekend they would use "all policy tools" to lift global growth.

The signals helped European stocks climb over 0.5 percent as takeover activity also continued in the UK gambling sector and talk of record profits at Ryanair helped dispel some of the recent gloom surrounding airlines.

Backsliding oil prices held back commodity firms and some emerging markets, however, meaning MSCI's All World index failed to get over the peaks it scaled last week.

Wall Street was expected to start the week flat too, with last week's record highs for the S&P 500 and Dow Jones likely to keep traders, still in the thick of earnings season, cautious for the next couple of days. [.N]

While the weekend's signals from the G20 meeting in China were welcome, investors are anticipating a hectic week that includes a U.S. Federal Reserve meeting, European bank stress tests and what could be another super-sized slug of stimulus from Japan.

"I think everyone is range-trading at the moment and just waiting to see what the direction is," said TD Securities head of global research Richard Kelly.

"The Bank of Japan is really the one that is front and centre this time with the all talk around 'helicopter money'," he added. "If they disappoint, which I think is probably more likely, then we are likely to see risk assets coming off."

Bank of Japan chief Haruhiko Kuroda said at the weekend he could ease policy further but also that there had been no discussion about the more radical option of "helicopter money" whereby the bank might directly underwrite government debt.

The yen was losing ground against the dollar, though at 106.30 yen it was off last week's six-week low and the greenback struggled to make much of an impact against either sterling or the euro.

The dollar's index against a basket of six major currencies stood at 97.371, having hit a 4-1/2-month high of 97.543 on Friday.

"Dollar/yen could test the 108 handle if the Fed's comments this week are supportive towards a rate hike and if the BOJ eases," said Koji Fukaya at FPG Securities in Tokyo.

"On the other hand, the pair could drop below 105 if the BOJ stands pat as easing expectations are well entrenched."

OIL TOILS, POKEMON NO-GO

In bond markets, euro zone yields mostly held near post-Brexit lows.

Benchmark German 10-year yields were up a few ticks at minus 0.06 percent and the Italian and Spanish equivalents were at 1.24 and 1.12 percent respectively, a couple of basis points from multi-month lows.

As well as ongoing talk of central bank stimulus and low oil prices keeping down inflation, this week also sees a series of bond redemptions that will mean investors have cash to buy again.

Oil prices meanwhile hovered near 2-1/2-month lows having lost about 4 percent last week on renewed worries about a global crude glut.

Strategists at Barclays said global oil demand growth was set to be a third of what it was in the same quarter last year.

Brent crude futures traded at $45.40 per barrel, down 0.6 percent and near Friday's $45.17 which was its lowest since May 11. Gold also struggled, dipping 0.5 percent to 1,316 an ounce.

Emerging markets remained focused on Turkey where assets were rebounding from a hammering last week. Istanbul stocks clawed back 3 percent of the 13 percent they had lost following the country's failed coup, while the lira bounced over 1 percent.

Asian trading had been mostly rangebound though Nintendo's shares tumbled as much as 18 percent after the company said smash hit Pokemon GO would have a limited impact on the games maker's earnings.

Nintendo owns some of the rights to Pokemon and has an undisclosed stake in GO's developer Niantic and the firm's stock price had more than doubled over the last two weeks, adding nearly $12 billion to its market value.

(Reporting by Marc Jones; Editing by Andrew Heavens and John Stonestreet)