Equity markets worldwide extended the week’s rally yesterday and oil prices rebounded from recent lows, even though market volumes were beginning to thin as investors started to reduce exposure as the end of year approaches, traders said.

Wall Street posted modest gains after the S&P 500’s best two-day rally in three years brought the index within one per cent of its all-time high after the last policy statement of the year issued by the US Federal Reserve buoyed investor sentiment.

Markets overall were ending 2014’s final full week of trade on a high. Wall Street’s momentum, hopes that Russia was stabilizing and a recommitment from Japan to its massive stimulus campaign pushed Asian stocks to their best day in 15 months.

“We have digested the drop in oil, we have gotten past the Fed, and now we will see what we will do for the rest of the year,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

Brent oil prices rose back above $60 a barrel, recovering from near a 5-1/2-year low, as investors squared books ahead of the year-end after a six-month slide.

The rise in oil, which along with gas is among Russia’s chief source of export revenue, helped the hard-hit rouble claw back another five per cent of the roughly 58 per cent it lost between the end of June and Monday.

“I think Russia still bears watching over Christmas because oil has not bottomed out. A dip in Brent prices below $60 means that financial stability and economic stability is still at risk,” said Phyllis Papadavid, currency strategist with BNP Paribas in London.

The rouble this week slumped as much as about 20 per cent against the dollar despite a massive hike in Russian interest rates, putting at risk the stability on which President Vladimir Putin has built his popularity.

In Europe, worries emerged that the European Central Bank’s money-printing plans could come with a number of restrictive strings attached.

Officials speaking to Reuters on condition of anonymity said the ECB may require countries such as Greece or Portugal to set aside extra money or provisions to cover potential losses from any bond-buying it embarks on next year.

The euro zone blue-chip EuroSTOXX 50 and the Swiss SMI both ended down 0.4 per cent as all major continental indexes fell.

The FTSEurofirst 300 index of top European shares, was boosted by a 1.2 per cent surge in stocks on Britain’s FTSE 100, ended 0.4 per cent higher at 1,361.07.

Wall Street was expecting some volatility during “quadruple witching,” the expiration of stock options, index options, index futures and single-stock futures.

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