Policy hopes help lift global stock markets

Monday 21:00 BST. Global stock markets began the holiday-shortened week on a positive note as equity bulls shrugged off the firmer tone of the dollar and a renewed retreat for oil prices.

Hopes for further stimulus measures in China offered support, along with optimism that any interest rate increases from the Federal Reserve would be gradual. But the markets also kept a wary eye on developments regarding Greece's efforts to secure fresh funding from its international creditors.

In New York, the S&P 500 rose 1.2 per cent to 2,086, recouping some of last week's 2.3 per cent decline, as a fresh burst of merger and acquisition activity helped lift biotechnology stocks.

The day's advance left the US equity benchmark about 1.5 per cent below the record closing high it struck at the start of March.

Energy stocks were unfazed by weaker oil prices. Brent crude fell as low as $55.20 a barrel before settling at $56.29, down 0.2 per cent.

Across the Atlantic, the FTSE Eurofirst 300 index rose 1.2 per cent, led by the technology and carmaking sectors, while the Xetra Dax in Frankfurt rose 1.8 per cent to retake the 12,000 level.

In Tokyo, the Nikkei 225 rose 0.7 per cent while the Shanghai Composite added 2.6 per cent to reach its highest in seven years.

In a speech on Saturday, President Xi Jinping highlighted two regional initiatives aimed at shoring up trade and investment with China's neighbours - the so-called Silk Road economic belt, and the Asian Infrastructure Investment Bank.

Furthermore, the governor of the People's Bank of China suggested that policy could be eased by cutting interest rates further or applying quantitative measures to boost investment and growth and to halt the emerging disinflationary trend.

Meanwhile, the outlook for US monetary policy remained firmly in focus ahead of the release on Friday of the March non-farm payrolls report.

Remarks at the end of last week by Janet Yellen, Fed chairwoman, offered little in the way of fresh insight into the central bank's thinking.

"Ms Yellen stressed that a significant pick-up in core inflation and/or wage growth was not a precondition for beginning to raise the Fed funds rate," noted Paul Ashworth at Capital Economics. "This repeats comments reported in the January Federal Open Market Committee meeting minutes.

"Repeating her congressional testimony from last month and the latest FOMC statement, Ms Yellen said that Fed officials merely need to be 'reasonably confident' that inflation will climb back to the 2 per cent target within a year or two.

"Otherwise, the timing of the first rate hike will hinge on the pace of further improvement in labour market conditions."

Analysts expect Friday's report to show that 250,000 jobs were created last month while the jobless rate is forecast to hold steady at 5.5 per cent.

Data on Monday showed US consumer spending inching up 0.1 per cent in February, slightly less than expected, while the price index for personal consumption expenditures - the Fed's main gauge of inflation - rose 0.2 per cent, ending a string of three declines.

Pending home sales rose by a solid 3.1 per cent in February.

The prospect of higher US borrowing costs continued to offer support to the dollar, which was up 0.8 per cent against a basket of currencies . The 10-year Treasury bond yield was 1 basis point higher at 1.96 per cent.

The euro was 0.7 per cent weaker at $1.0811 - but some way clear of a recent 12-year low beneath $1.05 hit in mid-March. Gold was down $13 at $1,185 an ounce.

The single currency's decline came as the markets waited to see whether Greece could reach agreement with its eurozone lenders over reforms that would unlock funding for the cash-strapped nation.

According to reports, Athens' list of proposals, which was discussed in Brussels over the weekend, required much more information and details.

"Although some of the latest reform plans are seemingly backed by corresponding draft legislation, the Greek list seems to lack focus on two aspects seen as crucial by the ex-Troika, namely pension and labour market reforms," said economists at Daiwa Capital Markets.

The yield on Greek two-year government bonds rose 40 basis points to 20.87 per cent, according to Reuters data, although shares in Athens rose 0.5 per cent.

The German 10-year Bund yield held steady at 0.21 per cent. Preliminary data showed that the country's recent spell of negative inflation had lasted only two months as consumer prices rose by 0.1 per cent in the year to March.

Eurozone economic sentiment, meanwhile, reached its highest level in nearly four years this month

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