European shares rise amid optimism over US fiscal stimulus

European shares jumped on Monday and the bond market calmed, with yields dropping from their recent spikes, while optimism about US fiscal stimulus sent oil prices higher, Reuters reports.

After Asian stocks rallied overnight, European share indexes opened higher, with the STOXX 600 up 1.7% at 0837 GMT. London’s FTSE 100 up 1.8% and Germany’s DAX was up 1.3%.

The MSCI world equity index, which tracks shares in 49 countries, was up 0.5%, recovering from the previous session’s multi-week low.

The much-anticipated $1.9 trillion COVID-19 relief bill was passed in the U.S. House of Representatives on Saturday, and now moves to the Senate.

In the bond market, key yields fell from their recent highs.

The U.S. 10-year treasury yield was down around 4 basis points at 1.4118% at 0837 GMT, having dropped from Thursday’s one-year high of 1.614%.

Germany’s benchmark 10-year Bund yield was down around 5 basis points, also below last week’s spike.

Market participants have become wary in recent weeks that, when economies re-open from their coronavirus lockdowns a combination of massive government stimulus and pent-up consumer demand will cause inflation to accelerate.

“There is little doubt in my mind that central banks will eventually lean quite hard against a sustained rise in yields,” wrote Deutsche Bank strategist Jim Reid in a note to clients.

They simply can’t afford to see it happen with debt so high.”

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