Cautious Fed keeps stocks happy, oil slips from highs By Reuters

By Dhara Ranasinghe

LONDON (Reuters) -World stocks hovered around record highs on Monday, confident the U.S. Federal Reserve is in no rush to step away from massive stimulus, while oil prices fell as Hurricane Ida weakened after it forced precautionary shutdowns of U.S. Gulf oil production.

Major European bourses were broadly steady, while U.S. stock futures were just a touch firmer , with overall trade subdued given a public holiday in Britain.

The Europe-wide was on course to end August with a more than 2% rise – its seventh month of gains in what would be its longest such winning run in over eight years.

Asian stocks hit a two-week high and Japan’s blue-chip closed up 0.5%, leaving MSCI’s world stock index hovering at record highs.

Positive sentiment in equity markets was underpinned by Friday’s Jackson Hole speech by Federal Reserve Chair Jerome Powell in which he said tapering of stimulus measures could begin this year, but added the central bank would remain cautious.

“The market is more focused on the medium-term, so any weakness in equity markets has been seen as an opportunity to buy the dips and Powell has helped preserve these trends,” said Pictet Wealth Management strategist Frederik Ducrozet.

“We are going from great to good — the outlook is not as great as it was earlier this year but it’s still consistent with further equity market gains.”

Chinese shares remained the outlier, with the U.S.-listed shares of gaming firms such as NetEase (NASDAQ:) Inc down on signs of further regulation.

Chinese regulators slashed the amount of time players under the age of 18 can spend on online games to an hour on Fridays, weekends and holidays, state media reported on Monday.

The new rules come amid a broad crackdown by Beijing on China’s tech giants, such as Alibaba (NYSE:) Group and Tencent Holdings (OTC:) that has hammered Chinese shares traded at home and abroad.

OIL OFF HIGHS

Oil prices pulled back from a four-week high as Hurricane Ida weakened into a Category 1 hurricane within 12 hours of coming ashore.

Nearly all U.S. offshore Gulf oil production, or 1.74 million barrels per day, was suspended in advance of the storm.

Focus turned to a meeting of the Organization of the Petroleum Exporting Countries and its allies on Wednesday, with sources telling Reuters the group is likely to keep its oil output policy unchanged and continue with its planned modest production increase.

futures were a touch lower on the day at $72.66 a barrel, holding below four-week highs hit earlier in the session. They rose more than 11% last week in anticipation of disruptions to oil production from Hurricane Ida.

U.S. oil fell 0.4% to $68.46 a barrel, having jumped a little…