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Global stocks rise, dollar dips as Fed calms inflation fears

written by Bella Palmer

The MSCI World Index rose 0.3 per cent, the STOXX Europe 600 Index rose 0.6 per cent while the FTSE 100 added 0.7 per cent

Global stocks edged higher and the dollar dipped on Friday after U.S. Federal Reserve officials said there would be no imminent move to tighten monetary policy in the world's biggest economy.

The bounce, extending a late recovery in the prior session, interrupted a three-day rout for stocks globally, amid market jitters over accelerating U.S. inflation.

The MSCI World Index, a broad gauge of equity markets globally, rose 0.3 per cent in early European trading, adding to Thursday's 0.4 per cent gains after a loss of more than 4 per cent since the start of the week.

The STOXX Europe 600 Index rose 0.6 per cent in early trade while the FTSE 100, Europe's biggest index, added 0.7 per cent.

The gains followed overnight strength in Asia, where Tokyo's Nikkei climbed 2.3 per cent, while MSCI's broadest index of Asia-Pacific shares outside Japan added 0.8 per cent and Chinese blue chips gained 2.2 per cent.

U.S. stock futures pointed to a higher open on Wall Street, with S&P 500 futures higher 0.6 per cent and Nasdaq rising 0.8 per cent.

Among Fed speakers overnight, Governor Christopher Waller signalled rates would not rise until policymakers either see inflation above target for a long time or excessively high inflation.

Inflation, it seems, matters less today than yesterday, Chris Weston, head of research at broker Pepperstone in Melbourne, wrote in a note to clients.

"The buy-the-dip crowd were out in force," suggesting that recent selling was "a pullback within a bull market," he said.

Looking ahead, traders will wait for the release of a fresh batch of U.S. data including April retail sales, industrial production and capacity utilisation, while the Dallas Federal Reserve President is also set to speak.

In Europe, meanwhile, the European Central Bank (ECB) is set to publish the accounts of its April meeting.

Benchmark 10-year Treasury yields dropped by nearly 4 basis points overnight and eased further to trade at 1.6539 per cent.

After holding steady in Asia overnight, the U.S. currency edged lower against a basket of its major peers, with the dollar index down 0.2 per cent at 90.57, taking a breather after recent strong gains.


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