Global shares rallied on Thursday, pushing the benchmark world index to a fresh 11-month high, while the euro hit a one-year peak against the low-yielding dollar as investors put back risk trades due to economic optimism.
An upgrade in Japan's view on the economy, upbeat Chinese data and bullish comments from a senior Beijing government economist, plus Wednesday's firm U.S. industrial output data all helped to prompt investors to pile on risky assets and dump safer and low-yielding instruments.
The latest leg of the risk rally started earlier this month when Group of 20 finance chiefs pledged to keep emergency economic stimulus packages in place.
Policymakers have made it plain that they are going to do everything they can to sort out this problem, said Neil Dwane, European chief investment officer at Allianz Global Investors'
Investors are now realizing that interest rates are going to remain low, bond rates are going to remain low and therefore you might as well to take risk and at the moment there is only one place for your to take risk -- it's equities. MSCI world equity index rose 0.7 percent to levels not seen since October 2008, bringing its gains this year to almost 28 percent.
The Bank of Japan upgraded its view on the economy, bringing it a step closer to phasing out some of its measures to support corporate funding.
U.S. industrial production rose for a second month in August, data showed on Wednesday, reinforcing views that the nation's recession had ended.
Chen Dongqi, China's senior government economist, said the country's economy may regain double-digit annual growth in the fourth quarter of this year, potentially bringing policy tightening closer.
Economic data for industrial output, investment and credit all surprised on the upside in August.
The FTSEurofirst 300 index rose 0.7 percent onb Thursday while emerging stocks hit a fresh one-year high.
U.S. crude oil fell 0.1 percent at $72.40 a barrel.
The September bund futures fell 36 ticks.
The dollar hit a one-year low against a basket of major currencies. The euro reached a one-year high of $1.4766 while the New Zealand dollar rose to its highest in more than a year above $0.7157.
Firm stocks suggest the dollar is probably set to slide for another week, said Hideaki Inoue, chief manager of FX trading at Mitsubishi UFJ Trust Bank in Tokyo.
(Additional reporting by Dominic Lau; editing by David Stamp)