World stocks claw back losses but set for second weekly fall

Frankfurt (Nov 17)  World stocks clawed back more losses on Friday after spending much of the week in the red, helped by signs of progress in U.S. tax reform and strong corporate results, though many hurdles remain to secure passage of a tax cut deal.

The U.S. House of Representatives passed a tax overhaul expected to boost share prices if it becomes law. The legislative battle now shifts to the Senate. Despite their bounceback, however, global stocks were still on track for a second straight week of losses, their longest losing streak since August.

The MSCI world equity index , which tracks shares in 47 countries was up 0.1 percent on the day, but was heading for a 0.1 percent fall on the week.

European shares were sluggish in early deals after the previous session's strong recovery, with the STOXX 600 index falling back 0.1 percent as disappointing company results and downgrades weighed.

As earnings season drew to a close with 90 percent of U.S. and European companies having reported, analysts said results were supportive but weaker than in the previous quarters.

"European equity markets are trading in the red this morning and while this is being attributed to downgrades and earnings, I think it's simply part of a broader move away from risk and a decision to lock in some profits," said OANDA markets analyst Craig Erlam.

But it has been a bruising week, with global high yield bond markets also on course for a second straight week of losses - for the first time in a year - and Wall Street volatility at its highest in three months. On Friday, however, high yield "junk" bond prices recovered and market volatility also eased.

Reuters