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 Singapore set the tone for the World Bank and International Monetary
Fund spring meetings, to be held this week in Washington, as its
normally conservative central bank unexpectedly eased policy.
European shares added to Wednesday's substantial gains, though U.S.
stock index futures <ESc1> <1YMc1> pointed to a modestly lower open
on Wall Street.
The Bank of England kept interest rates on hold, as expected, but
sterling <GBP=D4> continued to suffer worries over how a June vote
on Britain's EU membership will play out.
Oil prices initially fell as OPEC warned of slowing demand and
Russia hinted that there might only be a loose agreement on output
levels at an exporter meeting in Doha at the weekend. Brent crude
later recovered.
The dollar, in which most commodities are priced, flexed its muscles
again having just chalked up its biggest one-day gain in over a
month.
It was at $1.1264 per euro, way above a six-month low of $1.1465
touched on Tuesday, and down 0.1 percent on the yen at 109.26 yen
but well away from Monday's 17-month trough of 107.63 yen.
"The dollar has been doing well over recent days, particularly
against Asian currencies today after the MAS (Singapore central
bank) eased policy," said Societe Generale FX strategist Alvin Tan.
"We have the IMF meetings coming and we also have the Doha meeting
which actually for the markets could be more important considering
how bulled up the oil market has been recently."
European shares, which rose 2.6 percent on Wednesday, were up 0.1
percent, though miners fell on lower oil prices.
Big gains in Asia meant MSCI's 46-country All World stocks index
rose for a fifth day to its highest this year. Asian shares have
surged 5 percent since Friday.
SINGAPORE STING
The main action came in Singapore as its central bank set the rate
of appreciation of the Singapore dollar policy band at zero after
data previously showed economic growth stalled in the first quarter.
That sparked the biggest drop for the Singapore dollar in eight
months and triggered a downdraft in other Asian currencies,
including the Korean won.
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"It's very interesting, and eye-catching, that the MAS has gone back
to post-global financial crisis settings, and sends a strong message
about the weak external environment," said Sean Callow, senior
currency strategist at Westpac in Sydney.
Earlier this week, the IMF cut its global growth forecast for the
fourth time in the past year, citing factors including chronic
weakness in advanced economies.
In the government bond markets, German 10-year yields the benchmark
for euro zone borrowing costs -- rose 2.1 basis points to 0.16
percent after the European Union's statistics agency revised upwards
its March estimate of annual inflation to zero from 0.1 percent.
U.S. 10-year yields were up 2.5 bps at 1.787 percent. The
yield on the 30-year Japanese government bond briefly hit a record
low of 0.385 percent in the run-up to a sale of the bond, which
garnered lacklustre demand.
Oil markets saw more choppy trading. Prices fell after Reuters
reported that Russian oil minister Alexander Novak told a
closed-door briefing that a deal on an oil output freeze scheduled
to be signed this month in Doha will be loosely framed with few
detailed commitments.
Brent crude futures fell 1.5 percent in Asian and European
trade to $43.53 per barrel after scaling a high of $44.94 on
Wednesday. They later recovered to $44.33, up 15 cents on the day.
(Editing by Keith Weir and John Stonestreet)
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