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The stock markets rise encouraged by lower inflation data, the yen advances

FILE PHOTO: Japanese yen banknotes are displayed at a media event in Tokyo, Japan.  November 21, 2022. REUTERS/Kim Kyung-Hoon/File
FILE PHOTO: Japanese yen banknotes are displayed at a media event in Tokyo, Japan. November 21, 2022. REUTERS/Kim Kyung-Hoon/File

By Dhara Ranasinghe

LONDON, Jan 13 (Reuters) – Global stocks hit one-month highs on Friday on signs inflation was slowing, while the yen jumped to seven-month highs and Japanese bond yields were above target. of the central bank as investors tested their commitment to its expansionary monetary policy.

* European stocks opened higher and the STOXX 600 Index hit its highest since April, while Asia-Pacific excluding Japan stocks hit a new seven-month high and were on course for a third straight week of gains.

* US stock futures pointed to a lower open on Wall Street, but general sentiment was upbeat a day after data showed US price pressures continue to ease.

* Japan grabbed market attention as the yen soared and the yield on 10-year government bonds exceeded the 0.5% ceiling set by the Bank of Japan amid speculation that its policy of controlling prices the yield curve could be revised, or even abandoned, as soon as next week’s policy meeting.

* The yen appreciated to 128.11 to the dollar, its highest level since late May, before trading 0.8% higher. The yen has appreciated 6% in just over three weeks, since the Bank of Japan surprised markets by widening the band around its 10-year government bond yield target.

* Beyond Japan, market sentiment was dominated by US December inflation data, which was more or less in line with expectations. The annual rate of rise in consumer prices slowed to 6.5% in December, from 7.1% in November.

* Investors responded by lowering US interest rate expectations. The Fed is now forecasting a 25 basis point hike instead of 50 next month, while futures markets forecast rate cuts later in the year.

* Against this backdrop, the MSCI index of world stocks hit its one-month high in and was preparing for its biggest weekly rise in two months.

* The yield on the 10-year US Treasury note fell to 3.418%, its lowest level since December 7.

* The euro rose to a nine-month high of $1.0868 and the risk-sensitive Australian dollar rose to a nearly five-month high of $0.6994.

* Oil rose on optimism about China’s reopening and Brent crude futures rose 0.4% to $84.33.

(Reporting by Dhara Ranasinghe; additional reporting by Tom Westbrook in Singapore and Kevin Buckland in Tokyo; Editing in Spanish by Ricardo Figueroa)

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