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 The pause by the dollar gave some respite to emerging markets as
well as oil and commodities heavily correlated to the U.S.
currency's strength, and helped MSCI's main world stocks index
secure its first rise in five days.
After surging over 1.5 percent on Wednesday and now 15 percent since
the start of the year, European bourses saw another solid start with
London, Frankfurt and Paris up 0.6, 0.2 and 0.1 percent
respectively.
The gargantuan market moves over the last week have been driven by
the starkly diverging policies of the world's major central banks.
The European Central Bank has just kicked off a 1 trillion euro bond
buying campaign, Japan's central bank is busily printing money, but
the U.S. Federal Reserve is heading towards its first rate rise in
almost a decade.
"I think we have to move (raise rates) now, or soon, in order to be
in the right position as the economy continues to evolve," James
Bullard, a Fed policymaker although one who will not vote at its
meetings this year, told the Financial Times.
On the surge in the dollar, he appeared relaxed, saying much of the
move may now have happened. "A lot has been priced in at this
point," he said.
Early European trading saw the greenback steady, having dropped
around 0.5 percent against a basket of six of the world's main
currencies.
The euro had also recovered to trade at just under $1.06 having
fallen as far as $1.0494 <EUR=> in Asia, the lowest since Jan 2003.
It has slumped 12 percent this year alone.
"The big question is whether we will see parity against the euro."
said Kerry Craig, a global markets strategist at J.P. Morgan.
COMMODITY RELIEF
The rally in euro zone bonds moved into its fourth day although at a
slightly more restrained pace, with the ECB forging ahead with QE
purchases and a wave of new debt sales expected to attract strong
demand.
Top ECB policymaker Benoit Coeure said the bank had bought 9.8
billion euros of bonds in the first three days of its buying
program, well above the run rate needed to hit its roughly 50
billion a month target for government bonds.
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Asian markets overnight had been lifted by a surprise interest rate
cut by South Korea which came hot on the heels of one from Thailand
and took the total number of central banks around the world that
have cut rates this year to a staggering 23.
MSCI's broadest index of Asia-Pacific shares outside Japan extended
gains and was up 0.7 percent, moving away from Wednesday's
seven-week lows. MSCI's 46-country benchmark world index climbed off
one-month lows.
The dollar's dip also helped commodities. Oil prices rebounded after
U.S. crude skidded to a one-month low overnight after government
data showed a U.S. oil inventory build last week, contrary to some
expectations for a drawdown.
It last stood at $48.42 a barrel, up about 0.5 percent on the day.
The European benchmark Brent added 1 percent to$58.18 a barrel,
while gold snapped an 8-day losing streak as it steadied at $1,160
an ounce.
(Reporting by Marc Jones; Editing by Tom Heneghan)
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