World stocks surged to an all-time peak today, and the dollar rose from this week's record low as investors grew optimistic that financial markets may have seen the worst of the credit crisis.
The stabilising dollar took the shine off gold, which hit a 28-year high yesterday, while interbank lending costs for three-month euro deposits hit six-year highs as investors bet on steady euro zone interest rates.
Yesterday UBS, Citigroup and Credit Suisse detailed expected losses from the credit crisis stemming from the fallout in US subprime mortgages.
Greater transparency about banks' exposure to housing and credit markets has helped investors shift their focus back to the strong fundamentals the global economy is enjoying this year.
The MSCI main world equity index surged past the previous July high to 418.05 points, an all-time high. The index is up 14 per cent on the year.
Even stronger gains came from emerging markets, where MSCI Asia index outside Japan and the broader emerging index rose 2 per cent to record highs. Both indexes are up more than 30 percent this year.
Europe lagged slightly, with the FTSEurofirst 300 index up 0.7 percent at a two-month high. Shares in troubled bank Northern Rock rose 6 per cent with traders citing talk of a rescue package.
In Dublin, the Iseq was up 248.90 points to 8,232.69 at 3.57pm.
The dollar was off Monday's record low against a basket of six major currencies while it was up 0.5 per cent at $1.4155 per euro after hitting a record low on Monday.