New York - Global equity markets and the dollar rode a rebound in risk appetite on Tuesday, lifting the S&P 500 to a record high, helped by signs of cooperation from Ukraine's pro-Russian separatists over the downing of the Malaysian Airlines jetliner.
Benign underlying US inflation in June also helped stocks on the view that the US Federal Reserve will continue on a slow path to paring its bond purchase program and will only begin to raise interest rates in the latter half of 2015.
After days of uncertainty, a train carrying the remains of some of almost 300 victims arrived in Ukrainian government territory and separatist leaders have given Malaysian authorities the aircraft's flight recorders.
The news helped settle market nerves, lifting shares in Asia, Europe and then on Wall Street as US markets opened, and pushing back safe-haven assets like the yen, gold and government bonds, which have been in demand over the past week.
MSCI's all-country equity index rose 0.72 percent, while the FTSEurofirst 300 index of leading European shares climbed 1.32 percent to close at 1,373.75.
All major European bourses closed up 1 percent or higher.
The benchmark S&P 500 set a record intraday high, though gains on Wall Street were not as strong as the rally in Europe.
The Dow Jones industrial average rose 67.99 points, or 0.4 percent, to 17,119.72.
The S&P 500 gained 12.1 points, or 0.61 percent, to 1,985.73 and the Nasdaq Composite added 38.685 points, or 0.87 percent, to 4,463.389.
While geopolitical concerns remained high as Israel pounded targets across the Gaza Strip, saying no cease-fire was near, the fighting was viewed as no worse than on previous days.
“Things have not worsened,” said Tom di Galoma, head of fixed income rates and credit trading at ED&F Man in New York.
“Equity markets globally were fairly robust, starting with Asia, Europe, and now Wall Street.”
The euro fell to an eight-month low against the greenback, breaking below its key support of $1.35, largely on expectations the European Central Bank would provide more stimulus in the coming months, lowering regional interest rates.
The single currency also hit a 5-1/2-month low versus the Japanese yen.
The euro lost 0.42 percent against the dollar to trade at $1.3466.
Against the yen, the dollar rose 0.13 percent to 101.52.
The benchmark 10-year US Treasury note fell 2/32 in price to yield 2.4836 percent.
Brent crude for September delivery rose 4 cents to $107.72 a barrel, while US oil for August delivery was up 6 cents at $104.65 a barrel.
The US August contract expires on Tuesday. - Reuters