TOKYO (Reuters) - Asian shares rose to 2 1/2-month high on Thursday, supported by strong economic fundamentals, while expectations the European Central Bank could start to wind down its stimulus boosted the euro and global bond yields.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.2 percent to extend its gains, hitting a 2-1/2 month high for a second straight day.Japan's Nikkei average .N225 rose 0.7 percent to 22790.68 in early trade.
The euro EUR= rose to a two-week high, while the 10-year U.S. Treasury yield US10YT=RR hit a 1-1/2-week peak on Wednesday, after officials said the European Central Bank could wind down its stimulus program by the end of the year.
Robust growth is making the central bank increasingly confident that inflation is on its way back to target, ECB chief economist Peter Praet said on Wednesday, raising the likelihood it may use a meeting next week to reveal more about the end of its bond-buying program.
Praet's comments sent the euro to $1.1796 EUR=, its highest level since May 22, on Wednesday. The common currency was last up 0.1 percent at $1.1781. The dollar index .DXY was down 0.1 percent to 93.565.
Worries over the effects of reduced ECB bond buying triggered a broad sell-off in German Bunds and other European government debt, which spilled over to Treasuries, analysts said.
The yield on Germany’s benchmark 10-year bond DE10YT=RR rose, while the benchmark 10-year Treasury yield US10YT=RR was up nearly 6 basis points at 2.975 percent after touching a 1-1/2 week high.
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