By Marc Jones
LONDON (Reuters) - World stocks soared again on Friday after China cut interest rates for the fourth time this year, just a day after the European Central Bank signaled that it is ready to increase the scale of its stimulus measures.
China's surprise out of hours move saw it cut it benchmark one-year lending rate by 25 basis points to 4.35 percent and lower big banks' reserve requirement ratio by 50 basis points to 17.5 percent.
European shares (FTEU3) and Wall Street futures (ESc1) kept climbing, having jumped on Thursday's message from ECB chief Mario Draghi that the central bank was ready to adjust "the size, composition and duration" of its QE program.
The FTSEurofirst (FTEU3) was up 2 percent ahead of U.S. trading and added to what was always going to be a fourth straight week of gains for MSCI's 45-country All World index <.WORLD>.
In the FX markets, the 'offshore' yuan
"It is basically throwing more fuel into the global risk rally after Draghi's pretty bold moves yesterday," said Alvin Tan, an FX strategist at Societe Generale (PA:SOGN), about the China cut.
Wall Street's main markets were expected to open around 0.75-1.3 percent higher (N), and commodity markets from oil (LCOc1) to metals were buoyed by the Chinese move.
Brent (LCOc1) climbed 0.7 percent to $48.42 a barrel, but for those hoping for a jolt to global growth for cheap energy, it was on track for its second straight weekly loss of almost 4 percent.
Global bond investors had two themes to weigh up.
The first, that additional Chinese stimulus could help boost global growth, pushed up yields on benchmark U.S. treasuries and European debt. [GVD/EUR]
The second, the prospect of more ECB stimulus by the end of the year, saw Italian
Greece's bond 'curve' was also close to normalizing, having been distorted for months in the wake of its political crisis that saw it teeter on the brink of leaving the euro.
"Draghi has come out and kitchen-sinked the whole thing, everything is now on the table," said Gavin Friend, a strategist at National Australia Bank in London.
"You combine what the ECB is now saying with (the fact) that the Fed is not going to be going aggressively and that the Bank of Japan is going to want to get involved, then you say 'Blimey!'"