Global stocks rise, bond yields subdued as more stimulus eyed

Thu Jun 30, 2016 4:49pm EDT
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By Edward Krudy

NEW YORK (Reuters) - World stocks rose for a third straight day and bond yields hovered near record lows as investors expected additional stimulus measures from central banks in the wake of Britain's vote to leave the European Union and as the Bank of England raised the prospect of bond buying this summer.

Renewed concerns over global growth and oversupply forced oil prices down again as both Brent and U.S. crude traded below $50 per barrel. Gold, a safe-haven play in times of uncertainty, edged higher and was on track for its biggest monthly rise since February.

Sterling reversed its gains as Bank of England Governor Mark Carney said the central bank would probably need to pump more stimulus into Britain's economy. Investors largely expect the bank to cut interest rates over the summer and ramp up its bond-buying program. UK shares surged after the news.

The European Central Bank is looking at loosening its rules for bond purchases to allow it to by a wider range of debt if it moves toward returning to quantitative easing, Bloomberg reported, citing people familiar with the discussions. The euro fell against the dollar and European stocks surged.

"There may be more of a growth crisis than any acute financial stress" from Brexit, said Stanley Sun, interest rate strategist at Nomura Securities International in New York.

Markets have regained their poise after a short bout of volatility following last week's so-called Brexit vote, but concerns remain about the longer-term global economic outlook and the potential for renewed turbulence.

The rebound in equities was not enough, however, to completely offset losses suffered in recent days. Stocks worldwide are down 0.8 percent for the month and on track for their worst monthly performance since February.

Wall Street rose as the benchmark S&P 500 index .SPX gained 1 percent, although the drop in oil prices suppressed gains as the index approached all-time highs. [.N]   Continued...

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, June 30, 2016.     REUTERS/Staff/Remote