European stocks edge higher as dust settles after Japan policy move

European and Asian stocks climbed on Thursday, spurred by the previous day’s rally on Wall Street helped by improved consumer confidence in the US.

The Stoxx Europe 600 was 0.4 per cent higher in early trade, building on the previous session’s 1.7 per cent gain. The MSCI Asia Pacific index climbed 1.2 per cent, aided by a rebound in Japanese shares as the dust continued to settle on the Bank of Japan’s decision to relax its policy of pinning bond yields near zero earlier this week.

In a quiet period for economic data in the run-up to Christmas, investors also seized on Wednesday’s figures showing US consumer confidence at an eight-month high in December as inflation fell back, according to Deutsche Bank strategist Jim Reid.

US stock futures indicated a further 0.2 per cent rise on Thursday for both the S&P 500 and the tech-heavy Nasdaq 100.

Global bond markets, which had been rocked by the BoJ’s surprise announcement on Tuesday, continued to regain their footing. The 10-year US Treasury yield fell by 0.05 percentage points to 3.63 per cent, while government debt in the eurozone and the UK also gained ground.

In currency markets, the pound shrugged off data showing the UK economy contracted by a larger than expected 0.3 per cent in the third quarter. Sterling traded 0.3 per cent higher against the dollar at $1.211.

The figures suggest the anticipated downturn in the UK economy could arrive sooner than previously expected, said Investec economist Ellie Henderson.

“The question now is whether the economy manages to eke out growth in [the fourth quarter] and avoid a recession at the end of the year,” she added.

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