World stock markets advanced yesterday, with US shares rebounding from a day earlier and bond yields easing off highs, following more cautious talk about the potential for interest rate increases this year.

Oil prices also rose as the US dollar hit session lows in morning trading after having touched a 10-day high, as the euro was boosted by minutes from the European Central Bank’s most recent policy meeting.

Comments from St Louis Fed President James Bullard yesterday appeared to ease some investor concerns about the Federal Reserve’s latest meeting.

Minutes from that meeting, released Wednesday, showed policymakers were more confident about the need to keep raising US interest rates, with most believing inflation would climb.

But Bullard told CNBC yesterday that central bankers need to be careful not to increase rates too quickly this year because that could slow the economy.

“Bullard made a comment on rates. That’s what has given the market a reason to see a little bit of a positive futures,” said Robert Pavlik, chief investment strategist at SlateStone Wealth in New York.

Benchmark US Treasury 10-year yields slipped from their four-year high hit in the previous session. The notes last rose 7/32 in price to yield 2.917 per cent, from 2.941 per cent late on Wednesday.

Bond prices, which usually move inversely to yields, firmed ahead of a US government auction of new seven-year notes, the final sale of $258 billion in debt this week.

The Dow Jones Industrial Average rose 293.47 points, or 1.18 per cent, to 25,091.25, the S&P 500 gained 25.27 points, or 0.94 per cent, to 2,726.6 and the Nasdaq Composite added 55.51 points, or 0.77 per cent, to 7,273.74.

MSCI’s gauge of stock markets across the globe gained 0.36 per cent.

European shares, however, seemed to follow Asia lower. A flurry of corporate results failed to lift sentiment after speculation about US interest rates soured risk appetite globally.

The pan-European FTSEurofirst 300 index lost 0.10 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.73 per cent lower, while Japan’s Nikkei lost 1.07 per cent.

The latest minutes from the ECB showed it retaining its dovish stance and said even changes in communication would be “premature.”

In Germany, Europe’s biggest economy, data showed business confidence fell more than expected in February.

Though Germany is set for solid growth in the first quarter, diverging monetary policy expectations with the United States sent the “transatlantic spread” between German and US 10-year borrowing costs to 222 bps, the highest in more than a year.

Oil extended gains on a surprise draw in US crude inventories and the weaker dollar.

US crude rose 1.56 per cent to $62.64 per barrel and Brent was last at $66.16, up 1.13 per cent on the day.

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