Stocks recover from wobble as ECB sends euro, yields higher

New York (Jan 12)  World stocks scaled fresh peaks on Friday while the euro hit a three-year high and Bund yields rose as progress on forming a German government gave fresh impetus to a bond market sell-off triggered by signs the ECB may accelerate an end to its stimulus.

MSCI's broadest gauge of the world's stock markets hit yet another record high and was on track to rise for its eighth of the nine business days so far this year -- for a total increase of 3.5 percent.

U.S. stocks were set to open higher as well, likely hitting new records once again having made a rapid recovery from Wednesday's losses. Dow Jones, S&P 500 and Nasdaq futures were up 0.1 to 0.4 percent.

"This bull market is highly related to the fact we are facing good growth, low inflation and soft monetary policy normalisation. If any of those were to be shaken that would be a big problem," said Jeanne Asseraf Bitton, head of cross-asset research at Lyxor Asset Management.

Germany's 10-year Bund yield hit a fresh five-month high of 0.54 percent after Chancellor Angela Merkel's conservatives and the Social Democrats agreed a blueprint for formal coalition negotiations, news that also buoyed the euro. Germany's DAX gained 0.3 percent on the news and European stocks took their cue from a recovery in Asian trading, but gains were more muted than the stellar start to the week as a surging euro weighed on European exporters.

MSCI's index of European stocks rose 0.2 percent as the euro hit its highest in three years at $1.2128 and last traded up 0.8 percent at $1.2126.

TheStreet