World stocks hit a new 12-month high on Tuesday, powered by strong results from Apple Inc
The strength in global stocks, up 75 percent from crisis lows, boosted optimism on corporate earnings and the global recovery, encouraging traders to sell dollars for higher-yielding currencies.
Crude and gold prices meanwhile eased from their earlier highs, while safe-haven government bonds were largely steady.
The MSCI All-Country World Index <.MIWD00000PUS> was up 0.2 percent at 300.00 points, after hitting 300.77 -- its highest level since late September 2008.
The gains in the index, up more than 75 percent since hitting a low in March 2009, was partly aided by a rally in emerging market shares.
MSCI emerging equities index <.MSCIEF> on Tuesday rose 0.4 percent after hitting a new 14-month high, and has risen nearly 120 percent from lows recorded in March.
The FTSEurofirst 300 <.FTEU3> index of top European shares eased 0.3 percent after the previous session's sharp gains. In Asia, Japan's Nikkei <.N225> gained 1 percent.
Apple's profits and sales beat Wall Street forecasts as iPhone and Mac sales hit quarterly records, while Texas Instruments cited strong demand from every industry that uses its chips for its better-than-expected third-quarter results.
These came on the back of strong quarterly earnings from Intel
It is what I call 'steady as she goes'. Stay in the asset classes that are doing well for the moment. Don't get carry away, said Michael Dicks, head of research and investment strategy at Barclays Wealth.
Obviously next year ... you have got a fair amount of time to look at how policymakers deliver their 2010 and talking about 2011 budgets. That's probably going to be the key how quickly they decide to start tightening up in countries that have been performing well.
Apple shares traded in Frankfurt
Positive corporate results were also seen in Europe, with LVMH
DOLLAR WEAK, COMMODS UP
The dollar fell 0.4 percent to 90.28 yen, while the euro was down 0.1 percent to $1.4955 after touching its highest level in 14 months at $1.4994 earlier -- a tad short of $1.5000.
In Asia, the yuan jumped against the dollar in benchmark offshore non-deliverable forwards (NDFs) on Tuesday as overseas speculators bet on long-term appreciation of China's currency against the dollar. The move implied a 12-month appreciation versus the dollar of 4.55 percent, the most since August 2008.
The dollar has been under sustained pressure this year due to expectations for low U.S. interest rates and questions about its status as the world's reserve currency.
Yields on benchmark 10-year U.S. Treasuries were down 1 basis point at 3.380 percent, and those on the 10-year euro zone Bund were down 2 basis points at 3.268 percent.
Crude futures rallied to a one-year high above $80 a barrel, boosted by improving sentiment following strong corporate earnings.
Also in the commodity sector, gold rose closer to last week's record highs above $1,070 an ounce as the dollar <.DXY> fell to a 14-month low against a basket of major currencies.
Societe Generale said in a note this week that investors tended to increase their positions in the best performers and sell the worst performers as they tried to window dress near the year-end.
Our full scale back tests ... prove that, when getting close to year-end, playing a momentum-based strategy (going long on the past outperformers, and shorting the past underperformers) has more than a 50 percent chance of success across the full spectrum of asset classes, Societe Generale said in a note.
Therefore, it is highly probable, all else being equal, that risky assets will do well by year-end.
(Editing by Stephen Nisbet)