Stocks rise as dollar tumbles

London: Global stocks rose and the dollar tumbled yesterday after the Group of 20 pledged to keep economic stimulus in place until recovery was assured, following Friday's news that US unemployment has risen to a 26-year high.

US stock futures were up around 1 per cent, pointing to a higher open on Wall Street. European equities rose for a fourth straight session to hit a two-week high, led higher by banking and commodity shares.

That came after Tokyo's Nikkei share average closed up 0.2 per cent and other Asian shares also gained.

"It's pretty clear that the stimuli that the governments have put in the market are going to be kept and that's a positive sign for the market," said Koen De Leus, economist at KBC Securities.

"That, for the moment, is the thing that keeps markets up, keeps the economy up and adds liquidity into the system. As long as these things are kept up, the markets can rally," he added.

The MSCI world equity index rose 1 per cent by late morning London trade.

The dollar fell broadly as higher-yielding and commodity-linked currencies benefitted from renewed risk-taking. "We have positive equity markets so we have risk appetite. And that is still a dollar negative. People are buying into higher yielding currencies or currencies where rates are going higher," said Niels Christiensen at Nordea in Copenhagen.

"It's difficult to pinpoint any reason to hold or buy the dollar. So the dollar is still the preferred funding currency," he said.

Backed by positive sentiment, the euro extended gains to hit a session high of $1.5011 after German industry output rose a higher-than-expected 2.7 per cent in September from the previous month, data showed.

The Australian dollar was up 1 per cent against the US dollar while the New Zealand dollar gained 1.6 per cent.

The G20 finance ministers and central bank governors' meeting in Scotland refrained from directly addressing currencies in talks on rebalancing the global economy.