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By Dhara Ranasinghe
LONDON World stocks scaled one-month highs on Friday as hopes of inflation easing took hold, while the yen jumped to seven-month peaks and Japanese bond yields breached a central bank target as investors challenged its commitment to loose monetary policy.
European shares rallied and the broad STOXX 600 index hit its highest since April, while Asian-Pacific shares outside Japan hit a new seven-month high and was headed for a third consecutive week of gains.
U.S. stock futures dipped but sentiment generally was upbeat a day after data showed U.S. price pressures easing further. World stocks were set for the best start to the year in decades.
Graphic: World stocks see stellar start to year https://fingfx.thomsonreuters.com/gfx/mkt/mopakjqdypa/Pasted%20image%201673606397958.png
Japan grabbed the market spotlight as the yen shot up and benchmark 10-year government bond yields briefly breached the BOJ’s 0.5% ceiling on speculation that its yield curve control policy could be revised, or even abandoned, as early as next week’s policy meeting.
A wave of emergency BOJ buying later reined the yield back in, but markets remained jumpy.
The yen strengthened to 128.11 per dollar — its highest since late May. It was last up 0.7% and has rallied 6% in little more than three weeks since the BOJ stunned markets by widening the band around its 10-year bond (JGB) yield target.
