World stock markets rose sharply Monday but the dollar fell after the Group of 20 rich and developing countries agreed to maintain their stimulus measures as long as economies remained weak.
The G-20 finance ministers pledged at a meeting in Scotland to "continue to provide support for the economy until the recovery is assured." The assurance came after U.S. jobs figures showed unemployment hit a 26-year high of 10.2 percent in October.
"Weekend news from the G-20, where finance leaders pledged to continue various programs of economic stimulus have given investors fresh hope that the stock market could still have some legs left in it," said Anthony Grech, market strategist at IG Index.
In Europe, the FTSE 100 index of leading British shares closed up 90 points, or 1.8 percent, at 5,232.72 while Germany's DAX rose 131.47 points, or 2.4 percent, at 5,619.72. The CAC-40 in France was 78.20 points, or 2.1 percent, higher at 3,785.49.
On Wall Street, the Dow Jones industrial average was up 143.44 points, or 1.4 percent, at 10,166.86 around midday New York time, having earlier struck a new 2009 high of 10,174.87. Meanwhile the open while the broader Standard & Poor's 500 index rose 15.91 points, or 1.5 percent, to 1,085.21.
Though stocks have risen after the G-20 meeting, the dollar has continued to fall as the finance ministers steered clear of any attempt to talk up the U.S. currency and committed to measures to support their economies until recovery is assured. An extended period of stimulus such as low interest rates and higher deficits could weigh on the dollar.
Comments from the International Monetary Fund that the dollar was still "on the strong side" in terms of its trade-weighted basis helped fan the dollar selling Monday, particularly against the euro. While the dollar may be weak against the euro, it is considered to be overvalued against the Chinese yuan.
"China's dollar peg is exaggerating the degree to which the yen and the euro are bearing the brunt of the dollar's downward adjustment and this is likely to be a political topic for the coming year," said Jane Foley, research director at Forex.com.
By late afternoon London time, the euro was 0.8 percent higher at $1.5004, its first breach of the $1.50 mark this month, while the dollar was 0.1 percent lower at 89.84 yen.
This week, attention turns towards the U.S. consumer with many leading retailers, such as Wal-Mart Stores Inc., Abercrombie & Fitch Co., Macy's Inc. and JC Penney Inc. reporting third quarter earnings. Without the help of the consumer, which accounts for around for 70 percent of the U.S. economy, any global economic recovery will be modest.
David Buik, markets analyst at BGC Partners, said the rise in U.S. unemployment is worrying for the retail sector _ the results this week may be "satisfactory," he said, "but what of the outlook?" Continued...