Global equity markets rose yesterday, as Wall Street shares surged on strong corporate earnings and European shares posted their biggest one-day gain in seven months, while the euro hit a two-week low against the dollar after weak German data sparked speculation the European Central Bank could cut interest rates.

On Wall Street, the major indexes jumped more than one per cent and were on track for a third straight day of gains on strong earnings from insurer Travelers Cos Inc and others, though investors said recent volatility was likely to return.

The euro fell as low as $1.2971 and could break decisively out of the $1.30 to $1.32 range that has held for the past couple of weeks. It was last down 0.7 per cent on the day at $1.2978.

The latest Purchasing Managers’ Indexes (PMIs) for the euro zone raised concerns about the economic health of the region, with business activity in Germany – the region’s biggest economy – contracting for the first time in five months in April. A broader gauge of the wider 17-nation zone showed the region still mired in recession.

Adding to concerns about Asia, growth in China’s vast factory sector dipped in April as new export orders shrank, suggesting the world’s second-largest economy still faces formidable global headwinds into the second quarter.

These reports also helped the yen move higher and drove the commodity-linked Australian ollar to a six-week low against the US dollar.

“Given the deteriorating fundamentals in the eurozone, the prospect of (an ECB rate cut) has certainly increased,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York. “A rate cut would be the quickest and least expensive policy course.”

Among top gainers on Wall Street, shares of Netflix Inc rallied 23 per cent to $214.90, after the video subscription service reported solid subscriber growth and better-than-expected profits in the first quarter.

The Dow Jones industrial average was up 142.96 points, or 0.98 per cent, at 14,710.13. The Standard & Poor’s 500 Index was up 15.96 points, or 1.02 per cent, at 1,578.46. The Nasdaq Composite Index was up 39.00 points, or 1.21 per cent, at 3,272.56.

The CBOE Volatility index, a measure of investor anxiety, fell 6.3 per cent, though it was coming off a jump of 24 per cent last week. “Equity gains have been getting progressively smaller, so it doesn’t really feel like a robust rotation into the market at this stage,” said Jeff Morris, head of US equities at Standard Life Investments in Boston.

Europe’s top share index closed up 2.4 per cent, the biggest daily rise since early August, buoyed by strong earnings and the expectations of a rate cut by the European Central Bank. The FTSEurofirst 300 provisionally finished at 1,182.49 points.

Brent crude oil fell toward $99 a barrel on concerns about the outlook for fuel demand.

June Brent crude was down $1.22 to $99.17 a barrel while U.S. crude for June delivery was down $1.10 at $88.09.

Gold fell around one per cent yesterday after the outflow from the biggest gold exchange-traded fund accelerated, investors shifted toward other assets like equities, and the stronger dollar put pressure on prices.

Gold fell 1.4 per cent to a session low of $1,405.44 an ounce and was seen at $1,408.81 by 1445 GMT, still down 1.1 per cent. Gold has dropped around 15 per cent this year.

In Treasuries, the benchmark 10-year US Treasury note was down 3/32 in price, with the yield at 1.7048 per cent.

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