By Marc Jones
LONDON (Reuters) - Strong Chinese trade data and signs that Germany may escape a severe spring slowdown pushed world shares to five-year highs on Wednesday and boosted growth-sensitive currencies and metals.
Wall Street, which has climbed over 13 percent this year, was also eyeing another record day for the S&P 500 and Dow Jones industrial average, with futures pointing to minor gains for both.
Last Friday's upbeat U.S. jobs data and robust German factory orders earlier this week have driven up global stock markets, and the positive mood was cemented on Wednesday as China followed suit.
Exports and imports in the world's number two economy were up 14.7 and 16.8 percent respectively in April. However, economists believe that manoeuvring by exporters and speculative capital inflows are masking weakness in real global demand.
The equity market rally showed no sign of letting up as huge injections of liquidity from leading central banks to boost their economies outweighed the doubts about the Chinese data.
MSCI's world index, which tracks stocks in 45 countries, rose 0.4 percent to a five-year high as top European shares followed their Asian counterparts.
Europe's bourses and the euro received an extra boost after German industrial production beat even the most optimistic of forecasts to jump by 1.2 percent in March.
"The improving orders situation in the industrial sector and a recovery in construction should give further impetus to the manufacturing industry in the coming months," Germany's Economy Ministry said in a statement.
The FTSEurofirst 300, which reached its own five-year peak on Tuesday, was up 0.4 ahead of the Wall Street restart as London's FTSE 100 , Paris's CAC-40 and Frankfurt's DAX held gains at 0.2-0.6 percent.
"The good news is that the German data are better than had been anticipated... and if you add that to the U.S. non-farms payrolls we saw on Friday, the spring slowdown doesn't seem to be as severe as feared," said Rabobank economist Philip Marey.
"If you look at stock markets, in a sense we are in an optimal balance. The data aren't strong enough so that the central banks would stop supporting the markets and at the same time the data aren't so bad that we are falling off a cliff."
In the currency market, the German data pushed the euro up 0.5 percent to $1.3135 as the safe-haven dollar softened and markets began to question whether the ECB would need to cut rates again.
Elsewhere the Australian dollar was hovering at a day high of $1.0195 after the data from China, its biggest export market. And across the Tasman sea, the Kiwi dollar fell as its central bank revealed it had intervened in the market to try and cool the currency.
Copper - one of the commodities tied most closely to global growth prospects - jumped more than 2.5 percent to a three-week high of $7,447 a tonne, but Brent crude gave back early gains to drop back below $104 a barrel.
Commodities remain the stand-out laggard of the stimulus-induced rally that has gripped markets since last May. Oil is 7 percent down versus this time last year, while last month copper hit its lowest in a year-and-a-half following weak growth data.
"Even with the news from China and Germany, the background is still pretty weak on the oil side as the market is well supplied," said Simon Wardell, analyst at Global Insight.
With little obvious read-across from the Asian data, European bond markets had been waiting for the German figures and the results of a five-year German debt auction.
The reassuring numbers and a smooth 4 billion euro sale for Berlin saw benchmark safe-haven Bunds pare gains and left investors trying to gauge the European Central Bank's next interest rate move.
With the global economic recovery remaining patchy, there have been clear signals from almost all the world's big central banks that they remain firmly in support mode.
While the Bank of Japan pursues an unprecedented stimulus drive, European Central Bank head Mario Draghi reiterated earlier this week that the bank would cut rates again if needed, and Australia's rates hit a record low on Tuesday.
"It's as if central banks were supporting their own government's bond markets. Wait a minute, they are!" said Rabobank strategist Adrian Foster.
(editing by David Stamp, John Stonestreet, Ron Askew)