By Marc Jones
LONDON (Reuters) - World shares climbed to a three-month high on Thursday as encouraging Chinese data and a record-high Wall Street kept traders upbeat before an expected extension of the European Central Bank's already generous stimulus programme.
Asia shares had risen to one-month highs after Wall Street rose to another record and European stocks made it four gains in a row, with the euro also near a month high on the prospect of ECB support.
The bank might signal an eventual scaling down of the aid, but most economists expect it to extend its 80 billion euro-a-month bond buying until at least next September and add a few tweaks to keep it running smoothly.
"Post the U.S. elections and Italian referendum, the market is overwhelmingly expecting unchanged monetary policy," said Aberdeen Asset Management Investment Manager Patrick O'Donnell.
"The risk is we get a more hawkish interpretation of inflation dynamics ... and any whiff that they are not committed to the asset-purchase programme will see the market react negatively."
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Bond markets drifted lower as traders retreated to the sidelines before the ECB meets. It will announce its decision at 1145 GMT and hold a news conference at 1230 GMT.
Risk appetite got a boost earlier when China reported upbeat trade figures, with exports and imports both beating forecasts. Resource imports were strong, a major reason prices for bulk commodities have been rising.
The resource-heavy and China-sensitive Australian market jumped 1.2 percent, as did MSCI's broadest index of Asia-Pacific shares outside Japan.
A record peak for Samsung helped lift South Korea 2 percent and Tokyo's Nikkei gained 1.45 percent as it brushed off a disappointing downward revision to Japan's third-quarter growth.
"The (China data) improvement reflects a strengthening in global demand, with recent business surveys suggesting that developed economies are on track to end the year on a strong note," said Capital Economics' Julian Evans-Pritchard.
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The bullish mood around the ECB outweighed news that Moody's had changed its outlook on Italy to negative, warning it may downgrade the credit rating if the country's deteriorating economic and debt trend was not reversed. https://bsmedia.business-standard.combit.ly/2hhI7xM
The euro took the move with aplomb, edging up to $1.0783 from an early trough of $1.0750.
European stock markets were up 0.3 to 0.7 percent and Italian bank shares hit their highest since June as Moody's cut was more than countered by reports Rome would step in to rescue troubled bank Monte dei Paschi.
Markets have been surprisingly buoyant in the wake of Italy's "No" vote last weekend on a constitutional reform referendum, in part on hopes for continued support from the ECB, which may also widen the type of bonds it buys.
All of which has been putting downward pressure on yields of European peripheral debt, with buying spilling over to German bunds and U.S. Treasuries. Yields on 30-year Treasury debt fell by 6 basis points on Wednesday, the biggest daily decline since August.
That nudged the dollar down to 113.40 yen, while the dollar index dipped 0.3 percent, having cooled off after its hot streak following Donald Trump's victory in the U.S. presidential election, with traders now waiting for a Federal Reserve U.S. rate hike next week.
The prospect of higher borrowing costs has not fazed Wall Street, which hit records on expectations a Trump administration will eventually deliver fiscal stimulus and deregulation.
U.S. futures pointed to a solid start later with jobless claims figures the main data on tap and the latest additions to Trump's team also being run through.
"Investments and policies that have done well in a low-rate, low-growth world have reached their peak. Long-term winners could be supplanted in 2017," said analysts at BofA Merrill Lynch in their year ahead outlook.
In commodity markets, oil steadied after slipping on doubts that production cuts promised by OPEC and Russia would be deep enough to end a supply overhang.
Brent futures were up 18 cent at $53.22 and U.S. crude inched to $49.95, and Russia announced it had sold a 10.5 billion-euro, 19.5 percent stake in oil giant Rosneft to Qatar and commodities trader Glencore.
Gold nudged higher and commodities including iron ore and coking coal held recent hefty gains as Chinese demand drove steel prices to their highest since April 2014.
China's imports of iron ore, crude oil, coal, soybeans and copper all surged in November, customs data showed.
Back in the currency market, New Zealand's dollar was the biggest gainer amongst the major currencies ahead of the ECB after its central bank head made it clear the bank was probably done with cutting interest rates [FRX/].
(Additional reporting by Wayne Cole in Sydney; editing by Ralph Boulton)
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