Oil and metal prices rose on Friday, driving a rise for world stocks, while the U.S. dollar and government bond prices slipped as investors gingerly put funds back into riskier assets. U.S. crude prices climbed towards $71 a barrel, extending a 2 percent gain the day before, after rebel attacks on Nigerian oil facilities disrupted supply. Firmer oil prices supported metal prices, with gold edging above $940 to a one-week high.
Commodity shares were also in demand, helping global equities higher. The MSCI world equity index advanced 0.8 percent, while the pan-European FTSEurofirst 300 rose 0.7 percent.
The MSCI world equity index is up more than 21 percent this quarter, on track for the biggest quarterly gain in its 20-year history.
Tokyo's Nikkei average added 0.8 percent on Friday, shrugging off a record 1.1 percent fall in consumer prices in the year to May — another sign falling demand is pushing the economy deep into its second spell of deflation this decade.
"Most people will agree now that we won't revisit the low point, that we have seen this year, again any time soon," said Luc Van Hecka, chief economist at KBC Securities.
"But there are still some problems to be resolved in the financial sector and as long as that is not out of the way in a convincing manner, we could still have intermediate corrections."
UBS, the world's largest wealth manager, said it planned to raise about 3.8 billion Swiss francs ($3.46 billion) by selling stock and expected to post a second-quarter net loss. The expected long road to global economic recovery remained a challenge to companies. Boeing Co, the world's No. 2 plane-maker, suffered another heavy blow to its Dreamliner project when a major customer, Australia's Quantas Airways, scrapped and deferred orders for 30 new planes.
WEAK DOLLAR
The dollar fell against a basket of currencies, extending losses made the previous day after the U.S. Federal Reserve gave no hint of an imminent exit from low interest rates and other bold measures to stoke growth.
The euro was up 0.3 percent against the dollar at $1.4029, while the greenback fell 0.1 percent to the yen.
"The market is just relieved to see the Fed is not in that much of a hurry to take (tightening) action," said Takahide Nagasaki, chief FX strategist at Daiwa Securities SMBC.
Yields on the benchmark 10-year U.S. Treasury rose four basis points, while those on the 10-year bund ticked up 1 basis points.
In one measure of how investor sentiment has improved, the CBOE Volatility Index, a favourite measure of investor anxiety, on Thursday closed at its lowest level since just before Lehman Brothers filed for bankruptcy protection last September.
