World stocks rose today while gold, oil and other commodities rallied as upbeat economic data and a weakening dollar underpinned raw material prices and related shares.
Friday's data showing a wider US trade deficit and weaker consumer sentiment weighed on the dollar, which is already under pressure from expectations that the Federal Reserve will leave interest rates near zero for some time to come.
A weaker US currency encourages investors to buy dollar-priced commodities, which also benefit from expectations for a strong global economic recovery.
Data today showed Japan's economy grew 1.2 per cent in July-September from the previous quarter, its fastest pace in more than two years, as stimulus lifted consumer spending and capital spending rose.
"The (stock) market is on an uptrend which could easily take the market another 10 to 15 per cent higher till the year end. We are basically in the midst of an year-end rally," said Franz Wenzel, strategist at AXA Investment Managers in Paris.
MSCI world equity index rose 0.6 per cent while the FTSEurofirst 300 index gained 0.8 per cent, helped by mining shares such as BHP Billiton boosted by gold hitting a fresh record high.
Emerging stocks gained 1.5 per cent.
The dollar fell half a percent against a basket of major currencies, holding just above last week's 15-month low, while the euro rose 0.3 per cent to $1.4977.
Kansas City Fed president Thomas Hoenig said the US economy still faced significant weakness, while warning that large financial institutions must be allowed to fail.
Some lingering speculation that China allow the yuan to strengthen also weighed on the dollar.
The United States and China sparred over exchange rates at a meeting of Asia Pacific leaders yesterday, pointing to tricky talks ahead for US president Barack Obama when he flies to China to address economic tensions.
"If anything, the Chinese authorities will renew the yuan appreciation trend when it is least expected and the last thing they will do is to appear to be bowing to US or international pressure," Calyon said in a note to clients.
"The Chinese authorities are concerned about hot money flows and do not want to give the impression that they are embarking on an aggressive revaluation path."
US crude oil rose 1.5 per cent to $77.47 a barrel while gold hit a record high above $1,132 an ounce. Platinum and palladium prices rallied to their highest levels in more than a year.
The September Bund future rose 47 ticks after European Central Bank Governing Council member Axel Weber said market stabilisation did not mean a sustainable recovery.
The European Union's Economic and Monetary Affairs Commissioner Joaquin Almunia said the strength and sustainability of the recovery remained uncertain.
Reuters