LONDON Investors seeking bargains helped push world stocks higher on Tuesday, particularly in Japan, where trading has been hugely volatile since last week amid concerns over the success of the country's stimulus program.
The Nikkei has been dictating market sentiment since Thursday, when it plummeted more than 7 percent after interest rates on the country's benchmark 10-year bond spiked to above 1 percent for the first time in a year. The swing in Japanese bonds unnerved investors at a time when Japan's already overburdened government finances are vulnerable to rises in interest rates.
The Nikkei 225 index rose 1.2 percent to close at 14,311.98 as the yen slipped against the dollar; the benchmark fell 3 percent on Tuesday. Overall, however, the index has soared 37 percent this year, a show of investor support for Prime Minister Shinzo Abe and his aggressive policies aimed at reversing years of economic malaise and deflation.
The recovery helped European stocks rise, with Britain's FTSE 100, which was closed for a public holiday Monday, jumping 1.6 percent to 6,763.55. Germany's DAX advanced 1.1 percent to 8,474.39, while France's CAC-40 rose 1.5 percent to 4,055.88.
Wall Street looked set for gains following a three-day holiday weekend. Dow Jones industrial futures were up 0.7 percent to 15,409. S&P 500 futures were likewise 0.7 percent higher, at 1,662.50.
Investors were awaiting the release later Tuesday of data on U.S. consumer confidence and home prices. The data will be scrutinized for how it might influence the Fed, which is undertaking its third round of aggressive bond-buying to help the economy. Speculation that the U.S. central bank might scale back the program based on a recent improvement in some economic indicators has sparked jitters in stock markets.
"The next move of the Federal Reserve is still the question for most investors," said Linus Yip, strategist at First Shanghai Securities in Hong Kong.
The consumer confidence data will highlight the ongoing improvement in sentiment driven by increases in both stock markets and the property sector, said Mitul Kotecha, an analyst at Credit Agricole CIB. "In the debate about early Fed tapering, the confidence data will err on the side (of) reducing Fed asset purchases sooner rather than later."
Elsewhere in Asia, the gains in Japan helped hoist other markets higher. Hong Kong's Hang Seng rose 1.1 percent to 22,924.25. South Korea's Kospi gained 0.3 percent to 1,986.22. Australia's S&P/ASX 200 advanced 0.2 percent to 4,970.70.
Benchmark oil for July delivery was up 69 cents to $94.84 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 10 cents to close at $94.15 per barrel on Friday.
In currencies, the euro fell to $1.2926 from $1.2934 late Monday in Europe. The dollar rose to 102.05 yen from 100.99.