Markets: Confidence Rally Poised

Confidence is back, risk is 'on' again and markets almost blushed with vigour last week, none more than the Aussie dollar which added a large 5.9% or nearly 6 USc in jumping well past parity with the greenback.

Most of that coming in a surge on Friday here and offshore as the currency charged past $US1.03 on a day that also saw the euro finish its best week against the US dollar for months.

In fact on Friday the euro jumped 3.8% against the greenback, its best day since 2009, so rapid was the rise in confidence and demand.

And it was the Aussie dollar's second weekly advance after losing almost 10% of its value in August and September.

The reason is the confidence that the eurozone is getting on top of the sovereign debt and bank capital problems.

A sharp rise in retail sales last month in the US (up 1.1%) helped push the dollar lower, but the big reason was the continuing confidence that a solution would be found for the European crisis.

That rising belief (which is based on words, not deeds) drove markets forward.

Friday's weakness here and in parts of Asia (after some average Chinese economic figures Thursday and Friday) will be reversed when trading resumes today.

The MSCI All-Country World Index rose 1.4% on Friday, extending its weekly gain to a very sharp 5.5%.

In New York, the Standard & Poor's 500 Index jumped 1.7% to 1,224.58, up 6% as well for the week.

The Hong Kong stockmarket fell 1.4% on Friday, the first fall in more than two weeks that had seen the market soar 14%.

It rose 4.5% last week.

The Shanghai market, which has been in a long bear phase or correction for most of this year, rose 3.1%, its first weekly rise in six weeks, thanks mostly to the move by the country's wealth fund to buy shares in the country's four biggest banks.

Copper increased 3.1% on Friday alone, helping push the S&P GSCI Index of materials up 2.4% on Friday and 5.2% over the week.

Gold and oil also rose on Friday and the week.

But US 10-year Treasury note yields rose six basis points to 2.25% as the Fed's attempt to push longer term rates lower ran into more opposing pressures in the market.

The euro was at $1.3881, its highest finish for the last five weeks. It was also the currency's strongest week since January.

Comex December gold for December delivery added $US14.50, or 0.9%, to settle at $US1,683 an ounce by the end on Friday.

On the week, gold gained 2.9%. The gains come on the heels of 0.8% gain the week before.

Copper's rise was a surprise, given the continuing fears about the Chinese economy.

Last week's 4.3% rise ended a four-week losing streak for the metal.

Comex December copper rose 10c to $US3.41 a pound.

A sharp jump in copper imports into China last month no doubt helped, but this week's growth and production data will be another test.

Comex December silver closed up 51 USc on Friday, or 1.6%, to $US32.17 an ounce.

Over the week, copper and silver rose 3.8%.

In New York Nymex November TWI crude rose $US2.57 to $US86.80 a barrel, the highest settlement since late last month.

Prices climbed 4.6% last week.

In London Brent oil for November settlement rose $US3.57, or 3.2%, to end the session at $US114.68 a barrel.

November futures expired on Friday and the more active December contract climbed $US3.03, or 2.8%, to $US112.23.

In New York the Dow and Nasdaq wiped out 2011's losses with solid rises.

For the week, the Dow gained 4.9%, the S&P 500 was up 6% and the Nasdaq jumped 7.6% thanks to a solid profit report from Google and the launch of the new Apple iPhone.

Apple leads a slew of tech giants reporting this week.

Australian shares are poised to reclaim much of Friday's losses when they reopen on Monday, with the SPI futures up 46 points, or more than 1%, to 4266.

The ASX200 index lost 0.9% on Friday, or 38.9 points, at 4205.6 points - cutting the week's rise to about 1%.

The All Ords dropped 37 points on Friday, or 0.86%, to 4269.

The Australian dollar surged overnight Friday to close at $US1.034.

Elsewhere in Asia, the Nikkei rose 1.7% for the week after it also fell 0.9% on Friday.

South Korea's Kospi Index rose 4.3%.

Jakarta jumped 7% after the central bank cut interest rates and the Indian market finished up more than 5% in a solid week's trading.

It was the Indian market's highest close in nearly a month.

The MSCI Asia Pacific Index rose 3.4% last week, the biggest weekly advance since late March.

In Europe the Stoxx Europe 600 Index rose 2.8% last week.

London's FTSE 100 added 3.1%, Paris's CAC 40 was up 4%, the Italian market rose 5% and Germany's DAX index ended up 5.1% as continental investors joined in the confidence rally.