World shares and risk assets rallied and the dollar backed off highs on Thursday, after the Federal Reserve flagged a rate hike next month, but also an intention to take things slow and steady after that.
The pick-up in risk sentiment combined with the dip in the dollar .DXY gave commodities a reprieve from recent selling, with oil and gold inching higher.
European stocks also opened strongly with the FTSEurofirst 300 .FTEU3 pushed to a three-month high by more than 1 percent gains in London .FTSE, Frankfurt .GDAXI and Paris .FCHI, after Japan's Nikkei .N225 had hit a similar peak in Asia.[.T]
Minutes of the Fed's last policy meeting showed most members were ready to sanction the bank's first rise in rates in almost a decade in December as long as further moves then depended on the economy continuing to perform well.
"We have had an interesting FOMC minutes and risk assets have rallied across the board with the dollar weaker and EM leading the way," said Alvin Tax an FX strategist at Societe Generale in London.
"That is the success of the Fed really. We expect they will hike in December but then proceed slowly after that and that has soothed markets."
Leaps across Asia meant MSCI's benchmark emerging market share index .MSCIEF was on course for its best day in a month and the 45-country All World equivalent .WORLD was up for a fourth straight day.
Bond markets also seemed to get the message that the Fed was in no rush with rates with longer-term debt outperforming and the yield curve flattening noticeably. While two-year yields rose 3 basis points, those on 30-year paper actually dipped a basis point.
Yields were also lower across most of Europe and Asia. The premium offered by U.S. two-year debt over its German counterpart yawned out to 124 basis points, the fattest margin since 2006 and a positive for the dollar.
However, being long dollars has been a very crowded trade and investors decided to book some profits in the wake of the Fed minutes. Against a basket of currencies .DXY the dollar dipped 0.4 percent and away from a seven-month peak.
The euro edged up to $1.0682 EUR= and off a seven-month trough around $1.0615. The dollar also eased against the yen to 123.25 JPY=, after touching a three-month peak of 123.67.
Minutes of the European Central Bank's last policy meeting are due later on Thursday and will likely reinforce expectations of further easing from Frankfurt in December.
Peter Praet, the ECB's chief economist kept up the speculation saying the so called "zero lower bound" for interest rates was lower than most had originally thought.
COMMODITY RELIEF
In Asia overnight, the Bank of Japan surprised no one at its regular policy meeting by maintaining the current pace of asset buying, though many still suspect it will have to ease again at some point to force inflation higher.
Tokyo's Nikkei .N225 firmed 1 percent, brushing aside a disappointing report on exports and imports.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 2 percent, with Australia's main index AXJO up by the same amount for a third straight session of gains.
After a slow start, Chinese markets caught the better mood and the CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen added 1.6 percent.
In commodity markets, gold added 0.6 percent to $1,077.20 an ounce having been at its lowest since early 2010. Zinc, copper, lead and nickel were all near their lowest in five to seven years.
Oil prices rose from three-month lows on short-covering. U.S. crude steadied at $40.65 a barrel, while Brent firmed 20 cents to $44.34. [O/R]
"People are seeing oil at these very low levels and so they want to step in," said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.