Global stocks rose to their highest in more than three weeks today, underpinned by expectations that the US Federal Reserve and European Central Bank will provide stimulus to support their struggling economies.
Inflows into safe-haven German government bonds waned, keeping prices close to three-week lows after ECB president Mario Draghi said the central bank would do whatever it takes to preserve the euro, a message echoed by German chancellor Angela Merkel and French president Francois Hollande.
This raised expectations that the ECB could take bold measures to lower soaring Italian and Spanish borrowing costs and supported riskier assets.However, some investors doubted that ECB policymakers would deliver in line with market expectations when they meet on Thursday, and this kept the euro lower.
The MSCI world equity index was 0.2 per cent higher at 316.12 points, extending gains into a third straight day and trading at levels last seen in early July.
European stocks extended their rally after Italy's borrowing costs fell at an auction. The FTSEurofirst 300 index of top European shares was up 1 per cent at 1,067.07 points, a level last seen in early April.The Euro STOXX 50 index was up 1 per cent at 2,324.03 points, after briefly rising to a three-month high of 2,335.15.
Italy sold €5.48 billion of government bonds in an auction at which yields fell compared with the previous comparable sale.
Spain's IBEX index was up 2.1 per cent and Italy's FTSE MIB was up 2.7 per cent.
Lead indices were also in positive territory with the FTSE-100 up 0.65 per cent, the German Dax up 0.76 per cent and the French CAC 40 up 0.39 per cent.
Despite the rise in stocks, the euro fell 0.3 per cent to $1.2285, well below a three-week high of $1.2390 touched on Friday. Still, it was trading above a two-year low of around $1.2042 struck last week before Mr Draghi's comments.
Attention will be on the US central bank which holds a policy meeting this week. Speculation is rising the Fed may do more to bolster recovery, after data showed US second-quarter gross domestic product expanded at a 1.5 per cent annual rate, the weakest pace of growth since the third quarter of 2011.
Earlier today, Japan's Nikkei share average firmed on growing expectations of further stimulus measures with a handful of strong earnings reports also lending support.
Quarterly earnings from Fujifilm and competitor Konica Minolta buoyed the market, but investors punished Fujitsu for a wider-than-expected operating loss by kicking it to a 33-year low.
The Nikkei edged up 0.8 per cent to 8,635.44 points to a one-week high, but stopped short of 8,687.93, the 50 per cent retracement of its rally from June 4th to July 4th.
Volume on the broader Topix index was at 84 per cent of its 90-day average. The index put on 0.7 per cent to 731.74.
Reuters
