LONDON (Reuters) - World stocks hit a three-week high on Thursday and the euro and German Bund yields also rose as investors priced in a potentially earlier-than-expected wind-down of stimulus from the European Central Bank.
The selloff in safe-haven Bunds drove money into riskier assets, especially financial stocks, despite investors’ anxiety over how a G7 leaders summit that kicks off on Friday will pan out in view of global trade concerns.
Bank stocks, which tend to gain from higher bond yields, drove European shares up in early trade. The pan-European banks index .SX7P jumped 1.4 percent, helping the STOXX 600 .STOXX gain 0.5 percent.
Banks remain the worst-performing sector in Europe year-to-date, however, having been dented by a selloff triggered by political risk in Italy.
MSCI’s index of world stocks .MIWD00000PUS rose 0.3 percent to its highest since May 14, helped by Asian shares which climbed to an 11-week high overnight.
The euro EUR= and Germany’s benchmark 10-year bond DE10YT=TWEB both climbed on signs that the ECB could soon call an end to its stimulus programme.
The bank’s Chief Economist Peter Praet said on Wednesday that robust growth made it increasingly confident that inflation was on its way back to target, raising chances it may reveal more about the end of the bond-buying programme at its meeting next week.
Praet’s comments took the market by surprise, given a recent slowdown in the euro zone economy.
The euro hit its highest level since May 15 at $1.1838, and traded up 0.4 percent at $1.1824 by 0920 GMT. The common currency’s rise helped drive the dollar index .DXY down 0.3 percent to
