LONDON - Global stocks rose to their highest in two weeks on Thursday while the dollar sagged after recent upbeat U.S. data and ahead of the key non-farm payrolls report.
Improving risk appetite also helped drive commodity prices higher and boosted demand for higher-yielding currencies such as the New Zealand dollar, which hit two-week highs against the dollar.
Investors cheered after data on Wednesday showed pending home sales rose to a six-month high in April. Expectations are high that Friday's obs data will show the U.S. economy generated more than 500,000 jobs last month.
"Yesterday's news on U.S. pending home sales and auto sales are signs confidence is improving in the economy," said David Buik, partner at BGC Partners. "We are also expecting decent U.S. non-farm payroll numbers tomorrow which is quite key."
Global stocks as measured by MSCI .MIWD00000PUS climbed 1.4 per cent to highs seen on May 19, and emerging markets stocks .MSCIEF rallied more than 2 per cent.
The FTSEurofirst 300 index .FTEU3 of top European shares put on 2.1 per cent with financial shares such as Banco Santander and Barclays among the bright spots.
Energy stocks ended a four-day losing run, with BP, which had been battered by the Gulf of Mexico disaster, rising 4.6 per cent.
Earlier, Tokyo's Nikkei share average rose over 3 percent .N225, posting its biggest one-day rise in six months.
"At least for today, we're seeing some stabilization in risk appetite," said Marcus Hettinger, global currency strategist at Credit Suisse in Zurich.
Improving risk appetite hit the dollar and further dented a shaky yen, which lost ground for a second session.
Traders had speculated that Japan's next prime minister would take a tougher stance in fighting the yen's strength as an opportunity to trim long positions in the yen, market participants said.
Against a basket of major currencies, the dollar .DXY fell 0.5 per cent.
The dollar, however, rose 0.5 percent versus the yen to 92.60 yen and the euro gained 0.9 per cent to 113.97 yen.
The New Zealand dollar climbed toward $0.69, its highest since May 19.
Government bond yields rose as appetite for safe-haven assets weakened. The 10-year German Bund yield climbed 5 basis points to 2.705 per cent, while the 10-year U.S. yield put on 3 bps to 3.379 per cent.
Gold also fell, but U.S. crude oil futures rose $1.24 to $74.10 a barrel and copper climbed 1.0 per cent to $6,760.00 a tonne.
