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of higher eurozone interest rates took the euro to an 11-month high against Japan’s yen.
Investors were generally upbeat about the global economy following solid US jobs data on Friday.
World stocks as measured by MSCI were up a third of a percent, flirting with a month high and close to gaining 5 percent for the year to date.
There were underpinned mainly by emerging stocks, up 0,6 percent. Japan’s Nikkei closed up 0,1 percent.
European stocks opened lower but posted gains soon after, adding to three-week highs hit last Friday.
The FTSEurofirst 300 index of top European shares was up 0,1 percent after gaining 1,5 percent last Friday.
Corporate activity was in focus with shares in chemical group Rhodia jumping after Belgium’s Solvay launched a bid for its French rival.
Vodafone rose after selling its 44 percent stake in France’s second biggest telecomm operator SFR to Vivendi.
But it is the improving macroeconomic backdrop that has been primarily responsible for equities bouncing back from their
March tumble, related to Japan’s disaster and civil unrest in North Africa and the Middle East.
This growth improvement has led to expectations that the European Central Bank will raise interest rates last Thursday and that the US Federal Reserve may be getting closer to withdrawing liquidity.
“As the economy turns the corner and gets back on its feet, central bankers are beginning to see inflation as a greater threat than lack of growth,” said Jonathan Sudaria, dealer at Capital Spreads.
Reflecting expectations of differing rate paths, the euro hit fresh 11-month highs against a broadly weaker yen and touched a five-month peak against the dollar.
In contrast to the ECB, the Bank of Japan is likely to downgrade its economic assessment at its meeting tomorrow and may consider finding more ways to help the economy recover from last month’s massive earthquake and devastating tsunami.
The euro briefly popped above 120 yen for the first time since May 2010 and was later at 119.60 yen.
It hit a five-month high against the dollar of US$1,4269 but was later at US$1,4235.
“We expect the EUR to be supported this week in anticipation of a hawkish Press conference alongside a widely expected rate hike,” Barclays Capital said in a note.
“While we believe this will be sufficient to keep the market’s attention away from wider (eurozone) peripheral concerns, they remain a risk.”
There was little respite for the periphery’s bond sector with Fitch cutting Portugal’s credit ratings by three notches to BBB – late last Friday, one notch above junk, and signalling further downgrades are likely.
Traders also said Spanish Prime Minister Jose Luis Rodriguez Zapatero’s decision not to seek a third term in 2012 elections would raise questions over Madrid’s future commitment to economic reforms. – Reuters.