Global equity markets rallied and the yen fell to a nearly seven-year low against the dollar yesterday after the Bank of Japan surprised financial markets by ramping up its massive economic stimulus programme.

The unexpected jolt from the BOJ put the dollar on track for its biggest daily gain against the yen in 18 months while driving gold and silver to their lowest since 2010.

The stronger dollar also pushed Brent crude toward its steepest monthly decline since 2012 as the oil benchmark fell below $85 a barrel.

Equity markets surged as the BOJ decision to buy more assets helped ease concerns about the end of the Federal Reserve’s US stimulus program and the European Central Bank’s reluctance thus far to engage in large-scale bond-buying.

The BOJ’s board voted 5-4 to accelerate its buying of government bonds, while tripling its purchases of exchange-traded funds and real-estate investment trusts.

Also, Japan’s $1.2 trillion Government Pension Investment Fund announced new portfolio allocations that will double its holdings of domestic and foreign stock holdings.

MSCI’s all-country world equity index rose 0.99 per cent, while the FTSEurofirst 300 index of top European shares gained 1.84 per cent, to close at 1,351.96. In Tokyo, the Nikkei stock index soared 4.8 per cent.

On Wall Street, the Dow Jones industrial average hit a record intraday high and the benchmark S&P 500 came within one-tenth of 1 per cent of its record peak.

The Dow Jones industrial average rose 171.11 points, or one per cent, to 17,366.53.

The S&P 500 gained 18.99 points, or 0.95 per cent, to 2,013.64 and the Nasdaq Composite added 59.92 points, or 1.31 per cent, to 4,626.05.

The dollar surged past its October 1 high of 110.09 yen, rising as far as 112.47, its highest since December 2007.

The greenback pared some gains to trade 2.5 per cent higher at 111.94 yen, on course for its biggest gain since April 2013.

The euro jumped to a six-week high against the yen of 140.70 yen, and fell 0.57 per cent to $1.2540 against the dollar.

The dollar index, a measure of the greenback against six major currencies, rose 0.76 per cent at 86.803.

US Treasury debt prices fell as investors moved away from safe-haven bonds and grew more optimistic about prospects for the world’s largest economy.

Benchmark 10-year Treasury notes fell 7/32 in price to yield 2.3299 per cent.

Brent crude oil fell below $85 a barrel on a firmer dollar and a well-supplied market.

Brent for December was down $1.23 at $85.01 a barrel. US crude was down $1.12 at $80.00.