European shares leapt as oil prices hit three-month lows today as US-led troops swept across the Iraqi desert and British forces said they hoped to be in Baghdad within three or four days.
Demand for safe-haven bonds slumped, pushing up yields, and the dollar rose slightly against the euro.
Many investors remained concerned about the potential for burning of oil wells, terror attacks and chemical warfare but the early successes of US-led forces seeking to overthrow Iraqi President Saddam Hussein dominated.
"Sentiment is (being) bolstered by views that US and British troops are making smooth progress in Iraq, encountering little opposition. Things may change if we get into bloody street combat in Baghdad," said one Paris-based equity trader.
A Reuters poll of fund managers yesterday found most expected the war to be over within a month.
European shares shot up as investors took an optimistic view of the early US successes in the Iraq war.
The FTSE Eurotop 300 index was up 2.86 per cent and the narrower DJ Euro Stoxx 50 gained 3.89 per cent.
In Dublin the ISEQ index of shares was up 87.56 to 4,060.04 by mid-morning.
US stock indices suggested that Wall Street would open higher later in the day.
Crude oil, which had shed a quarter of its value as war approached, reversed course from earlier gains which had come on talk Iraq may have set fire to some oil wells.
London's Brent crude was down 20 cents at $25.30 a barrel and US light crude lost 22 cents to $27.90.
Oil tumbled to around three-month lows after the initial attack on Thursday on hopes of a swift war. Traders said, however, that worries about massive damage to Iraq's oil infrastructure, a spread of the conflict to other Middle East countries and other factors make the price vulnerable.