[WELLINGTON] Global stocks rallied on speculation that central banks will expand stimulus measures. Oil surged with emerging-market currencies, while haven assets retreated.
The Stoxx Europe 600 Index rose 2 per cent after the Topix index in Tokyo jumped the most since September and shares in Hong Kong rebounded from the lowest since June 2012. Commodity companies led the advance as crude extended last session's rally. The euro was near a two-week low after European Central Bank President Mario Draghi indicated he may bolster economic support as soon as March. Australian bonds and gold declined, while the Russian ruble and Malaysian ringgit surged.
Global monetary policy is once again in focus amid signs some of the world's key central banks may be prepared to act with markets rocked by uncertainty over China's slowdown and oil's crash. Diminished inflation expectations and a strengthening yen are seen as adding increasing pressure on the Bank of Japan to enlarge stimulus at its meeting next week. China will keep intervening in its equity market to "look after" investors and has no intention of further devaluing the yuan, vice president Li Yuanchao said.
"The cavalry might be coming to the rescue in terms of the central banks starting to sound more dovish," Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd, which oversees about US$120 billion, said on Bloomberg TV. "There's a little bit of light at the end of the tunnel. We've probably seen the worst and by the end of the year things will be a lot brighter than they are now." Stocks The MSCI All-Country World Index gained 1.2 per cent at 8:15 am in London. The Stoxx 600 headed for the biggest increase since Dec 23, while all 10 of the MSCI Asia Pacific Index's industry groups advanced as the regional gauge climbed 3.7 per cent.
The Topix jumped 5.6 per cent, its steepest one-day climb since Sept 9, while the Nikkei 225 Stock Average, which capped a 20 per cent slide from its most recent high earlier in the week, gained 5.9 per cent to trim its drop in the week to 1.1 per cent. Hong Kong's Hang Seng Index rose 2.9 per cent.
Australia's S&P/ASX 200 Index climbed 1.1 per cent, rising for a second day to put the gauge on track for its first five- day advance in three weeks. The S&P/NZX 50 Index in Wellington added 0.7 per cent, while South Korea's Kospi index increased 2.1 percent, cutting its weekly decline to 2 per cent.
Standard & Poor's 500 Index futures rose 1.1 per cent in Friday trading, following the US benchmark's 0.5 per cent rebound from a 21-month low.
"It's typical for central bank action - or the prospect of some - to act as a catalyst for improving sentiment and last night's price action bore that out," Cameron Bagrie, chief economist in Wellington at ANZ Bank New Zealand Ltd, said in a client note. "Climbs up the stairs invariably follow movements down the elevator as extreme pessimism corrects somewhat. However, problems are still numerous. If the post-global financial crisis era has taught us anything, it is that there is a limit to what central banks can, and should, do."
Gold trimmed its weekly advance as Asia stocks recovered and demand for haven assets eased. Bullion for immediate delivery fell 0.4 per cent, slimming its gain for the week to 0.7 per cent.
Brent crude rose as much as 6.3 per cent to US$31.10 a barrel on the ICE Futures Europe exchange. Prices are headed for a 6.2 per cent weekly gain, trimming its 18 per cent drop so far this year.
"After large directional movements like those we've seen over recent weeks, there tends to be corrective move in the opposite direction" for oil, Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone.
Russia's ruble strengthened 1.8 per cent and Malaysia's ringgit gained 1.9 per cent as the rebound in crude prices brightened prospects for the oil-exporting nations. Hong Kong's dollar rose as much as 0.4 per cent, the most in 12 years.
The yen was set for its biggest weekly drop in more than two months. The currency was down 0.3 per cent, extending its weekly decline to 0.9 per cent. The euro fell 0.5 per cent against the dollar. Yields on Australian 10-year bonds rose four basis points, gaining for a second day.
China's seven-day repurchase rate, a benchmark for loans between banks, declined by eight basis points to 2.34 pe rcent as the central bank stepped up efforts to address a cash squeeze. The authority told some banks to cancel repurchase agreements that were conducted at interest rates it deemed excessive and set limits for such loans, according to people familiar with the matter.