World shares rose toward six-year highs on Thursday and the yen languished at fresh lows against the euro and dollar after sentiment was boosted by a batch of strong U.S. economic data.
The signs of an improving U.S. jobs market and more cheerful consumers had spurred Wall Street to a record close on Wednesday, while reinforcing talk the Federal Reserve could start scaling back its stimulus, which supported the dollar.
"Markets have taken on board the view that (U.S.) rates are not going up next year even if they start tapering soon," said Simon Smith, chief economist at FXPro.
TSX posts gain
As the buoyant mood spread, Japan's Nikkei hit its highest close in nearly six years, and Asian shares outside Japan rose 0.6 percent to reach a one-week high.
In Europe, Germany's DAX index touched an all-time high as trading got underway while the pan-European FTSEurofirst 300 index was up 0.4 percent and on track to post its third straight month of gains.
U.S. stock markets were closed Thursday for the Thanksgiving holiday, but they have been on a nice run of late, with all the major indices either nearing or eclipsing their all-time highs in recent weeks.
The TSX also posted modest gains on Thursday, but at 13,397, Canada's benchmark stock index is still below its all-time peak above 15,000 which it hit in 2008 and then 14,000 again in 2011.
MSCI's world equity index, which tracks share moves across 45 countries, gained 0.2 per cent, reaching its best level since the start of 2008.
In the currency markets, the dollar popped above 102.00 yen for the first time since May 29, while the euro traded just under $1.36 and came within striking distance of 139.00 yen, reaching its highest against Japan's currency since June 2009.
So far this month, both the euro and dollar are up nearly 4 per cent on the yen which investors have been selling to raise funds for carry trades as the Bank of Japan remains committed to keeping ultra-loose monetary policy to shore up growth.
The surging greenback, which gains as the heightened tapering expectations push bond yields upwards, was also putting pressure on commodity bloc currencies like the Australian and New Zealand dollars and many emerging market currencies with weak economic prospects.
The Indonesian rupiah hit the 12,000 per dollar for the first time in nearly five years, while the Thai baht slid to the weakest level in 11 weeks.
European bond markets were focused on the outlook for inflation and its implications for the European Central Bank, which holds a policy meeting next week.
Spanish inflation rose 0.3 percent year-on-year in November from zero in the previous month, fuelling expectations that overall euro zone inflation figures, due on Friday, will come out above a 0.8 per cent forecast.
"The Spanish inflation figure ... will take a little bit of pressure off the ECB to do something at the next meeting," said Elwin de Groot, senior market economist at Rabobank in Utrecht.
German inflation due at 1300 GMT though could have a bigger influence on market expectations about the ECB outlook. Ahead of that data, 10-year German Bund yields were up 3.5 basis points to 1.74 per cent.
Elsewhere, Italian 10-year yields were flat at 4.065 per cent before an auction of up to 2.5 billion euros of 2024 bonds. The small amount on offer will ensure a smooth sale, analysts said.
Among commodities, Brent crude was holding above $111 a barrel as supply worries offset the positive outlook for demand from the signs of solid U.S. recovery.
Gold snapped a two-day decline, gaining 0.3 per cent to about $1,241.7 an ounce and moving away from a four-month low of $1,227.34 hit on Monday, though the outlook remained weak.
"In view of the apparent improvement in the (U.S.) economy, investors are slowly pulling funds out of gold for better avenues of investment," said Phillip Futures analyst Joyce Liu.