European stocks stoked by cooler inflation report

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European shares jumped on Monday after a key economic report for the region showed a fall in inflation - an optimistic kick-off for a week littered with major economic data, central bank meetings and earnings updates.

Investors are still pondering the implications of Friday's decision by theAnalysts at BofA estimate the BOJ's bond buying added $1.3 trillion to global liquidity in the past 18 months and provided a low floor for global rates, so any sustained rise in Japanese government bond yields could ripple though other bond markets.

Japanese 10-year yields surged to a nine-year-high up to 0.6% on Monday, and toward the new cap of 1.0%. That also put upward pressure on Treasury yields, where the 10-year rose 2 basis points to 3.98%. While the yen had initially rallied on the BOJ move, it soon reversed course as investors still seemed happy to run carry trades, or yen-funded positions in higher-yielding currencies.

"Friday's action might best be viewed as an attempt to head off a fresh wave of yen-weakening carry trade activity, by at least ceasing to resist pressure for 10-year yields to rise above 0.5%," said Ray Attrill, head of FX strategy at National Australia Bank.in the pound by the most since mid-June ahead of the Bank of England rate decision on Thursday.24% from a record low of $1.033 against the dollar in September after a disastrous budget, hitting a 15-month high of $1.

Oil prices took a breather with brent flat at $85.00 a barrel, while U.S. crude rose 18 cents to $80.78.

 

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