World shares extended a four-day rally on Thursday while the dollar hovered near a four-year high against the yen, supported by Japan's aggressive monetary easing and signs of a strengthening recovery in China.
News the U.S. Federal Reserve may scale back its massive bond purchases later this year has added support to the dollar, while failing to dampen the sentiment in share markets that has taken the key S&P 500 share index to a record high.
"Given the Japanese have kick-started a new wave of quantitative easing, that's going to be the tide that lifts all boats," said Commerzbank economist Peter Dixon.
Since the Bank of Japan unveiled its radical stimulus programme last Thursday, the dollar has gained about 7 percent, yields on major government bonds have fallen and the MSCI's world equity index has hit levels last seen in June 2008.
The gains have been helped by evidence of an economic recovery in China - notably signs of growing domestic demand and easier credit - and also by indications from the European central Bank last week that it is considering a rate cut.
Data out on Thursday showed Chinese banks made 1.06 trillion yuan ($171.2 billion) of new, local currency loans in March; trade figures on Wednesday showed a sharp rise in imports.
The fresh loans number "shows that there is ample funding in the Chinese economy to support growth and is positive for sentiment", said Dariusz Kowalczyk, senior economist for ex-Japan Asia at Credit Agricole CIB in Hong Kong.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8 percent after the Chinese data, helping lift the world equity index 0.4 percent, a day after posted its second best gain of the year.
Japan's Nikkei share average rose to its highest level since July 2008 due to the central bank's unprecedented stimulus measures, which eclipse even the Fed's aggressive bond buying plans.
Europe's FTSE Eurofirst 300 index, which posted its biggest daily rise in three months on Wednesday, extended the gains by 0.5 percent in morning trade while London's FTSE 100 , the Paris CAC-40 and Frankfurt's DAX were between 0.2 and 0.6 percent higher.
U.S. stock futures pointed to a softer Wall Street open after both the Dow Jones industrial average and the S&P 500 Index ended at historic highs on Wednesday.
The dollar rose as high as 99.88 yen in the currency markets but stayed just below the 100 yen level as traders await the expiration of large options contracts which have generated demand from banks to buy the yen and sell dollars.
Once these expire, the dollar is expected to make a decisive break higher, helped by rising expectations the Fed will cut back on its bond-buying programme; these were reinforced by the minutes of the U.S. central bank's March meeting.
The dollar was down 0.15 percent on the day at 99.65 yen JPY=, while the single currency fetched 130.38 yen, having touched a three-year high of 130.57 on Wednesday.
In the debt market, German government bond futures were slightly lower after Italy successfully auctioned 7.3 billion euros of new debt despite its continuing lack of a new government since February's inconclusive elections.
Gold bounced on Thursday from its weakest level in almost a week as rising tension on the Korean peninsula stirred some safe-haven buying in Asia, though gains are likely to be capped by uncertainty over the Federal Reserve's stimulus programme.
Heavy outflows from gold exchange-traded funds also weighed on the metal, in addition to the rally in world stock markets and Cyprus's plan to sell bullion reserves to help finance its share of an international bailout.
Gold hit its lowest since April 5 at $1,553.10 an ounce at one point before settling around $1,557.50, down 1.75 percent.
Brent crude oil slipped towards $105 per barrel after U.S. crude oil stocks hit their highest level in more than two decades and analysts cut forecasts for global oil demand growth.
Brent futures slipped 20 cents to $105.59 per barrel while U.S. crude futures <CLc1 > fell 25 cents to 94.39 per barrel, ending three straight sessions of gains.