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Emerging stocks were the biggest winners from
expectations for more stimulus, hitting a 6-1/2 month high,
while stronger-than-expected German first-quarter economic
growth data pushed the benchmark German bond yield off one-year
lows.
ECB President Mario Draghi signaled last week that the bank was
poised to ease monetary policy next month to support the
economy. Federal Reserve Chair Janet Yellen has said the U.S.
economy needed support, while expectations have been growing
China might unveil stimulus.
"There's a good chance we will see a small positive surprise in
euro zone (growth) numbers," said Jan von Gerich, chief fixed
income analyst at Nordea. "But I don't think we will see a big
back-up in yields with ECB easing in the pipeline."
European stocks <.FTEU3> rose 0.2 percent, having hit a six-year
peak, while Germany's DAX <.GDAXI> set a new record high. Asian
stocks <.MIAPJ0000PUS> also rose a quarter percent.
The MSCI world equity index <.MIWD00000PUS> rose slightly on the
day, dragged lower by declines in Tokyo and Shanghai shares.
Emerging stocks <.MSCIEF> rose a quarter percent, bringing
year-to-date gains to 3.8 percent.
The euro fell nearly 0.2 percent to $1.3690, off last week's
2-1/2 year high. German 10-year Bund yields traded at 1.38
percent.
"Except for quantitative easing, which it likely won't resort to
for a while, the ECB does not have a lot of easing options at
its disposal to keep the euro down," said Masafumi Yamamoto,
market strategist at Praevidentia Strategy in Tokyo.
"Therefore it will have to keep sending a steady message, saying
it will ease a step at a time. The various ECB officials will
also have to march in unison and convey the same message,
especially with the dollar also showing signs of weakness."
U.S. crude oil and Brent crude futures both fell. The dollar
rose 0.15 percent against a basket of six major currencies.
(Additional reporting by Marius Zaharia; Editing by John
Stonestreet)
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