Stocks advanced in Europe and Asia on Thursday, with the focus on energy companies as speculation US interest rates may not rise at all this year left the dollar nursing hefty losses and oil held most of the previous day's big gains.
The dollar suffered, by some measures, its steepest one-day percentage drop other than in the financial crises of 1998 and 2008-09 on Wednesday after weak US data and comments from a Fed policymaker interpreted as signalling further rate hikes could be delayed.
The US currency fell 0.2 per cent against a basket of its peers on Thursday, and held close to Wednesday's 14-week low against the euro and its weakest for a week against the Japanese yen.
"The dollar is on its knees," said Richard Benson, head of portfolio management with currency fund Millennium in London. "Probably we will now have some stability ahead of US payrolls tomorrow."
Dollar weakness, and unconfirmed talk that oil-producing countries in and outside the OPEC group may meet soon to discuss output cuts, helped crude prices add to Wednesday's sharp gains.
Brent, the global benchmark, dipped 5 cents to $34.99 a barrel, having fallen as low as $27.10 in mid-January.
Commodity-related shares pushed higher in early deals in Europe. The pan-European FTSEurofirst 300 index rose 0.4 per cent, while the STOXX Europe 600 Basic Resources Index gained 3.4 per cent and oil and gas index 2.2 per cent.
Britain's miner-heavy FTSE 100 index rose 1.2 per cent.
On the debit side, Swiss bank Credit Suisse slid 9.6 per cent after posting its first full-year loss since 2008.
MSCI's broadest index of Asia-Pacific shares outside Japan jumped 2 per cent. Australia's resource-rich index rose 2.1 per cent.
Tokyo's Nikkei fell 0.9 per cent, pressured by a stronger yen, which harms exporters, and by weak earnings forecasts from leading companies.
Chinese shares gained, with the CSI300 index closing 1.2 per cent higher as the weaker dollar eased concerns of a sharp near-term depreciation in the yuan currency.
Stocks globally have had a rough start to 2016, hurt by tepid US growth, falling oil prices, and concern the world faces a China-led slowdown.
But another potential worry -- that the US Federal Reserve would keep raising interest rates throughout 2016 -- has receded somewhat.
Fed policymaker William Dudley told Market News International in an interview published on Wednesday that monetary conditions had tightened since the Fed raised rates on December 3. and that rate-setters would have to take this into account.
Investors interpreted this as meaning future rate rises might be delayed. The federal fund futures market indicates traders no longer expect a Fed hike this year.
The euro was up 0.2 per cent at $1.1123, having firmed by about 2 percent on Wednesday. The yen gained about 0.1 per cent to 117.80 per dollar.
Sterling rose 0.1 per cent to $1.4610 as investors awaited a rate decision and economic forecasts from the Bank of England.
Stock market strength lessened the appeal of low-risk, low-reward government debt. Yields on German 10-year Bunds , the euro zone benchmark for borrowing costs, rose 1.4 basis points to 0.31 per cent.
Ten-year U.S. Treasury yields edged up 1 basis point to 1.89 per cent.
"The pressure from oil is easing...and tranquillity is returning to other markets so we can expect a bit of a step back from bonds, and yields should trend higher," KBC strategist Piet Lammens said.
The revised US rate outlook lifted gold, which traded close to a three-month high at $1,145.49 an ounce.