Global stock markets rose and sterling slid on Thursday after the Bank of England cut interest rates and revived a bond-buying programme to cushion the economic blow from Britain's June 23 vote to leave the European Union.
US stocks and the dollar traded in a tight range as investors exercised caution ahead of Friday's jobs report that could offer clues to the timing of the next US rate hike.
The Bank of England cut its main rate by a quarter percentage point to a record low 0.25 per cent and said it would take “whatever action is necessary” to achieve stability in the wake of Britain's vote to leave the EU.
The rate cut was widely expected but not the other measures.
'High Five'
“The Bank of England has hit a perfect 'High Five' at today's meeting, over-delivering against market expectations and bucking the recent trend of central banks disappointing,” said Nick Gartside, a JP Morgan Asset Management portfolio manager.
MSCI's world stocks index, which tracks shares in 45 nations, snapped a three-day losing streak and was up 0.33 per cent.
Wall Street, meanwhile, was subdued as investors kept to the sidelines ahead of Friday's US payrolls report.
“Folks would probably prefer to wait on those numbers before they make a commitment in front of them,” said Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas.
Unemployment claims
The number of Americans filing for unemployment benefits unexpectedly rose last week, and orders for factory goods fell for a second straight month in June.
The labour market, however, remains healthy and will probably continue to support economic growth for the remainder of this year.
The Dow Jones industrial average fell 2.95 points, or 0.02 per cent, to close at 18,352.05, the S&P 500 gained 0.46 point, or 0.02 per cent, to finish at 2,164.25 and the Nasdaq Composite added 6.51 points, or 0.13 per cent, to end at 5,166.25.
European stocks
Europe's broad FTSEurofirst 300 index closed up 0.72 per cent at 1,331.68, its best day in two weeks. Strength in major financial and industrial stocks such as Aviva Plc and Siemens AG boosted the region's equity markets.
The BoE's easing measures hammered sterling, which fell 1.52 per cent at $1.3120, its largest one-day drop against the dollar in a month.
“Sterling/dollar has weakened in line with our view and we still see scope for further downside in the pair,” said Sam Lynton-Brown, FX strategist at BNP Paribas in London.
The dollar index, which tracks the greenback against six major currencies, drew strength from the gains against sterling and was up 0.22 per cent at 95.773.
The stronger dollar kept a lid on gold prices, which turned higher on the BoE decision.
Spot gold prices were up 0.21 per cent at $1,360.41 an ounce.
In bond markets, the BoE rate cut sent yields on some short- and medium-term US Treasuries to their lowest in more than three weeks.
Treasury yields
The move pushed yields on 10-year UK government bonds, or Gilts, to a record low of 0.639 per cent. Benchmark 10-year US yields fell to their lowest in three days, at 1.484 per cent.
Oil prices rose for a second straight day and U.S. crude advanced firmly above the $40 a barrel mark on short-covering and after a modest stockpile drop at the delivery hub for U.S. crude futures.
Brent crude settled up $1.19, or 2.76 per cent, at $44.29 a barrel, while US crude settled up $1.10, or 2.69 per cent, at $41.93.