World stocks ticked higher on Tuesday as positive reports from UK banks kept the momentum with investors who chased risky assets in anticipation countries would keep monetary policy accommodative.
Sterling fell broadly after a warning on Britain's triple-A credit rating while the dollar held near a 15-month low as investors bought higher-yielding currencies.
HSBC shares rose 2 percent
They have joined a batch of rivals including Goldman Sachs reporting strong third-quarter results as capital markets and trading activity remained lively. Promises by G20 nations to keep economic stimulus in place until recovery was assured also helped risky assets.
Gains in European shares were limited however as investors consolidated their holdings after a four-session rally.
Monetary and fiscal stimulus has clearly taken hold, and has resulted in an initial growth spurt that has been sharp and fast, noted Bob Doll, chief investment officer for global equities at BlackRock.
Equity markets should be able to continue to gain, at least until global policymakers shift into tightening cycles. From our perspective, we believe we are at least several months away from that happening. MSCI world equity index <.MIWD00000PUS> rose 0.1 percent, while the FTSEurofirst 300 index <.FTEU3> gained 0.2 percent. In Asia <.MIAPJ0000PUS> emerging stocks rose 0.5 percent.
Emerging stocks <.MSCIEF> rose 0.3 percent.
U.S. crude oil fell 0.7 percent to $78.83 a barrel after tropical storm Ida, which cut U.S. oil and gas supplies, was downgraded from a powerful hurricane and U.S. crude oil stockpiles were forecast to rise slightly.
Oil prices have risen 77 percent so far this year but they are still nearly 47 percent below their high of more than $147 a barrel struck in July last year.
The December bund futures was unchanged as the market braced for fresh supply of government bonds. The Netherlands will sell up to 3.5 billion euros of bonds due 2012 on Tuesday, a day before Germany issues 6 billion euros of 10-year Bunds.
Sterling fell as low as $1.6600, before recovering to $1.6649, after Fitch said that of the four major economies with AAA status, Britain was the most at risk.
The Fitch report shows that the fiscal expansion comes at increasingly high costs, which will ultimately widen gilt spreads and undermine sterling, BNP Paribas said in a note to clients.
The dollar <.DXY> was up 0.1 percent against a basket of major currencies although it was close to the previous day's 15-month low.