World stocks rose on Monday, hovering near a 29-month high on further signs of global economic recovery, and copper rallied to a record high while U.S. 10-year Treasury yields hit their highest in 10 months.
The euro recovered after hitting a two-week low on Friday, while oil prices slipped.
World equities as measured by the MSCI All-Country World Index <.MIWD00000PUS> advanced 0.4 percent after gaining 2.2 percent last week. The index is up 3.6 percent so far this year, while MSCI emerging markets index <.MSCIEF> is down 1.8 percent.
At the moment, clients are feeling that any dips can be bought into and the trend is an upwards one, and I can't see that being thrown off course in the short term, said Giles Watts, head of equities at City Index in London.
Concerns over higher inflation in booming emerging markets, further indications of economic recovery gathering pace in the United States, modest valuations and tentative signs of stability in the euro zone sovereign debt crisis have fueled the outperformance of shares in developed markets.
Data from fund tracker EPFR Global showed investors pulled out $7 billion from emerging markets equity funds in the week of Feb 4, their biggest outflow in three years.
The U.S. S&P 500 <.SPX> and Dow Jones industrial average <.DJI> hit new 2-1/2-year highs on Friday as a fall in U.S. unemployment raised optimism of a labor market recovery. The pan-European FTSEurofirst 300 <.FTEU3> rose 0.9 percent on Monday, while Japan's Nikkei average <.N225> put on 0.5 percent, hitting a nine-month high.
In terms of valuations, the S&P 500 carries a 12-month forward price-to-earnings ratio of 13.3 times, compared with a 10-year average of 15.5 though more expensive than the emerging markets index's 11.3 times, Thomson Reuters Datastream shows.
As optimism over the U.S. economic recovery grew, investors were also shifting away from government bonds.
Yields on benchmark 10-year Treasuries rose 5 basis points to 3.6904 percent, their highest level since early May and up about 30 basis points since the start of the month.
Investors are now reflecting that an ever-improving outlook for the U.S. is a new factor in the equation, which is weighing quite heavily on U.S. Treasuries, said Kornelius Purps, strategist at Unicredit in Munich.
We have not only the (non-farm) labor report -- which was a mixed bag but seen as a positive -- we have the ISM, which were extremely positive and indicate the U.S. economy is recovering at quite a healthy clip.
The euro was up 0.3 percent at $1.3621 and 0.4 percent at 112.04 yen, while the dollar <.DXY> eased 0.2 percent against a basket of major currencies.
Copper put on 0.8 percent to a record high of $10,130 a tonne, while oil eased 0.2 percent to below $89 a barrel.
(Additional reporting by Simon Jessop, William James and Neal Armstrong; Editing by Hugh Lawson)