Stocks surge with pound as Brexit concern fades

[LONDON] Global equities rallied and the pound strengthened the most since 2008 on signs the campaign for the UK to stay in the European Union was gaining momentum before this week's referendum.

The S&P 500 Index jumped the most in a month, the Stoxx Europe 600 Index headed for its biggest gain since August and emerging-market shares advanced as a poll showed Britons favored remaining in the EU. Sterling jumped 2 per cent, Spanish bonds gained and credit risk fell the most since March. Oil rallied with industrial metals. The yield on 10-year Treasury notes jumped six basis points to 1.67 per cent.

Global equities have rebounded from a four-week low as riskier assets gained, after bookmakers' odds suggested the chances of a "Leave" vote faded since the murder of a pro- European lawmaker on Thursday. A poll over the weekend showed 45 per cent of voters backed the 'Remain' camp, while 42 per cent were in favor of a so-called Brexit.

The MSCI All-Country World Index jumped 2.1 per cent as of 10.14 am in New York, set for its biggest increase since March 1. The MSCI Emerging Markets Currency Index increased 0.8 per cent, and a gauge of commodities advanced for a second day.

The Stoxx Europe 600 Index jumped 3.4 per cent, for a second consecutive gain, with banks and financial-services companies among those leading the advance.

All major western-European markets climbed, with the UK's benchmark FTSE 100 Index adding 2.2 per cent. The volume of Stoxx 600 shares changing hands was 35 per cent higher than the 30-day average and a measure of euro-area volatility slid 9.5 per cent, its biggest drop since March.

The MSCI Emerging Markets Index of shares jumped 1.9 per cent, the most in more than two months. Benchmarks in Poland and Hungary climbed at least 1.2 per cent, while equities in Turkey gained 2.4 percent.

The pound strengthened against all except one of its 31 major peers, rising the most since December 2008 against the dollar. Among Group-of-10 currencies, the Swedish krona, Norwegian krone and Australian dollar all advanced at least 1.1 percent.

"The markets have always been more comfortable with the UK remaining in the European Union, hence the boost to risk sentiment now that the 'Remain' camp's campaign appears to be back on track," Kathleen Brooks, London-based research director at Gain Capital Holdings Inc., wrote in a note.

Oddschecker data show less than 30 per cent odds of a Brexit, from 40 per cent at the close on Wednesday. Federal Reserve Chair Janet Yellen, who's due to address lawmakers this week, said last Wednesday that the British vote was a factor considered by officials as they decided to keep interest rates unchanged.

The yen dropped 0.3 per cent to 104.49 versus the greenback, having surged2.7 per cent last week as the Bank of Japan refrained from expanding monetary stimulus at a time when Brexit risk was spurring demand for haven assets.

BLOOMBERG