Stock markets globally start 2018 on cheerful note; bond yields rise

World stocks hit fresh highs on Wednesday with European markets joining the party as early indications suggest 2018 will be another year of synchronised global growth led by a robust European economy.

After its biggest one-day gain in more than two weeks on Tuesday, and in the wake of its best year since 2009 in 2017, MSCI's index of global stocks, which tracks shares in 47 countries, pushed on to new record highs.

The pan-European stock index was 0.2 per cent higher following gains for their Asian and US counterparts overnight as manufacturing surveys pointed to a strong start for the European economy. US stock futures suggested another higher open on Wednesday.

The single currency was holding near a four-month high of $1.2081 hit on Tuesday.

"Investors have woken up in the new year and looked forward to another firm-year for global growth with very muted downside risk," said Investec economist Philip Shaw. But he warned against reading too much into the first two trading days of the new year.

"The converse is the sell-off in bond markets: the idea that inflation pressures may be firmer than expected and central banks could take a slightly more aggressive approach than previously thought," Shaw added.

ECB rate-setter Ewald Nowotny told a German newspaper that the European Central Bank may end its stimulus programme this year if the euro zone economy continues to grow strongly.

Earlier in the session, Asian stocks struck a range of new peaks: a record high for Philippine stocks, a 24-year top for Thailand and a decade-high for Hong Kong.

MSCI's index of Asia-Pacific shares outside Japan rose 0.4 per cent, having jumped 1.4 per cent on Tuesday in its best performance since last March.

This came after Wall Street started the new year as it ended the old, scoring another set of record closing peaks. The Dow rose 0.42 per cent, while the S&P 500 gained 0.83 per cent and the Nasdaq 1.5 per cent.

The gains in riskier assets came as industry surveys from India to Germany to Canada showed quickening activity.

"The breadth of the recovery is extraordinary," said Deutsche Bank macro strategist Alan Ruskin, noting that of 31 countries covered, only three failed to show growth while all the largest manufacturing sectors improved.

Elsewhere, spot gold reached its highest since mid-September at $1,321.33, before edging back to $1,317.32 per ounce.

Oil prices surged again, inching towards 2-1/2 year highs hit on Tuesday as strong demand and ongoing efforts led by OPEC and Russia to curb production tightened the market.

Brent crude futures was up 0.6 percent at $67 a barrel, while US crude futures shot up 0.8 percent to $60.87 a barrel.