Wall Street's three major indexes closed at records highs on Thursday, with the benchmark S&P 500 setting its 11th high in 14 sessions.
Gold hit a three-month peak while yields on U.S. Treasuries and Germany's 10-year bond tumbled on optimism about the world economy after positive Chinese manufacturing data and the move to increase liquidity dulled fixed income's safe-haven status.
News that China's central bank was freeing another 800 billion yuan ($115 billion) to prop up a slowing economy added to an improving outlook for economic growth, which has been fuelled by easing U.S.-Sino trade tensions.
China's factory activity expanded at a slower clip in December, pulling back from a three-year high the previous month as new orders softened. But production continued to grow at a solid pace and business confidence shot up.
The Caixin/Markit Manufacturing Purchasing Managers' Index for December eased to 51.5 from 51.8 in November, yet remained above the 50-mark that separates expansion from contraction for the fifth straight month.
In another piece of positive data, the number of Americans filing claims for jobless benefits edged lower last week, helping to offset recent signs in the U.S. labour market that new claims may be trending slightly higher.
"It still feels like this continuation of the surge that happened toward year-end in 2019," said Ken Polcari, senior market strategist at SlateStone Wealth LLC in Jupiter, Florida.
"You did have some good Chinese data that came out overnight, a positive manufacturing PMI, which is very expansionary and helping fuel the rally."
MSCI's gauge of stocks across the globe <.MIWD00000PUS> gained 4.51 points, or 0.8%, to an all-time high, while the pan-European STOXX 600 index rose 0.93%.
The double dose of Chinese news helped Europe's main markets in London, Frankfurt and Paris jump 0.82% to 1.06%, outpacing overnight gains in Asia and setting them on course for their best opening day of a year since 2013.
On Wall Street, the Dow Jones Industrial Average rose 330.36 points, or 1.16%, to 28,868.8. The S&P 500 gained 27.07 points, or 0.84%, to 3,257.85 and the Nasdaq Composite added 119.59 points, or 1.33%, to 9,092.19.
Emerging market stocks rose 1.20%, as the Bovespa index in Brazil advanced 2.5% to an all-time high and Mexico's bolsa index rose 2.1%.
Earlier in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> closed 0.94% higher.
China's blue-chip CSI300 index <.CSI300>, one of the world's best performers last year, rose 1.4%, reaching its highest since February 2018. Hong Kong's Hang Seng added 1.25%.
Alibaba Group Holding Ltd rose 3.6% on news that China's Ant Financial, an affiliate of the e-commerce giant, has joined the race for a digital banking license in Singapore, the company said in a statement.
Gold prices were boosted by doubts about the lasting strength of Wall Street's stock rally, said Jeffrey Christian, managing partner of CPM Group.
"There is nervousness about why the stock markets are as high as they are, given the economic and political environment," Christian said.
U.S. gold futures settled 0.3% higher at $1,528.10 an ounce. Spot gold hit a three-month high of $1,531.20.
The dollar recovered from a six-month low after a downbeat December left an index that tracks the greenback versus a basket of six major trading currencies near flat at the end of 2019.
The dollar index rose 0.42%, with the euro down 0.35% to $1.1171. The Japanese yen strengthened 0.14% versus the greenback at 108.55 per dollar.
Sterling posted its biggest daily loss in two weeks as euphoria after last month's UK election gave way to anxiety over the risk of a no-deal Brexit at the end of 2020.
The pound last traded at $1.314, down 0.86% on the day.
Benchmark 10-year U.S. Treasury notes rose 10/32 in price to yield 1.8754%.
Germany's 10-year bond yield briefly hit -0.16% on optimism better U.S.-China trade relations will spur global growth, denting safe-haven assets.
The yield on the bund, a benchmark for European lending, soon slid to -0.23%.
Oil prices steadied after early gains as signs of improving U.S.-China trade relations eased demand concerns and rising tensions in the Middle East provided support.
Brent crude futures settled up 25 cents at $66.25 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 12 cents to settle at $61.18 a barrel.
By Herbert Lash
