Global stocks rise on Japan stimulus ahead of Fed statement

The yen weakened earlier on Wednesday after Japan’s prime minister unveiled a surprisingly large $265 billion stimulus package to reflate the world’s third-largest economy.

The pan-European STOXX 600 index rose 0.5 per cent and the FTSEurofirst 300 0.4 per cent. Britain’s FTSE 100 index gained 0.3 per cent. Germany’s DAX index rose 0.8 per cent and has recouped all losses incurred since Britain’s June 23 vote to leave the European Union. The S&P 500 (.SPX) gained 0.81 points, or 0.04 percent, to 2,169.99 and the Nasdaq Composite (.IXIC) added 35.71 points, or 0.7 percent, to 5,145.76.

Asian stocks were mostly lower on Thursday as Chinese equities deepened their losses, souring risk sentiment that had improved earlier after the Federal Reserve provided a positive assessment of the USA economy.

Expectations that the BOJ will adopt fresh stimulus after its two-day policy meeting starting on Thursday have helped to bring down the two-year yield to a record low of minus 0.370 percent.

In Europe, the yield on the benchmark 10-year German government bond, or bund declined 1.7 basis points to negative 0.0930%. With expectations for more easing from the BOJ, bond traders in the USA are paying more attention as policies that push Japanese bonds further into negative territory are driving demand for Treasuries.

The Australian stock market is higher on Thursday, though gains are modest following another mixed lead from Wall Street.

LONDON, July 28 (Reuters) – The dollar took its biggest tumble in nearly two months on Thursday and stocks fell from nine-month highs as cautious sounds from the Fed left focus firmly on Japan’s next round of money-printing measures.

Traders are pricing in just a 48 percent probability the central bank raises rates by the end of the year, based on the assumption that the effective fed funds rate will trade at the middle of the new Fed target range after the next increase. This time the bigger story is the Bank of Japan (BoJ). The euro EURJPY, -0.39% to ¥115.88 from ¥116.56 late Wednesday. Earlier this week, it had risen as high as 97.569, its highest level since March.

Treasury yields held mostly lower, with the 2-year yield near 0.75 percent and the 10-year yield near 1.55 percent.

Gold prices gave back 40 cents at $1,320.40 U.S.an ounce.

The yen weakened to USA session lows of 105.50 on the report, from 104.79 earlier.

USA crude CLc1 rose 0.3 percent to $42.04 a barrel on bargain hunting after sliding to a three-month low of $41.68 on Wednesday after news U.S. crude and gasoline stocks had surged, reflecting weak demand during the peak summer driving season.