World stock markets racked up record highs on Thursday and the dollar fell as investors bet major stimulus from new U.S. President Joe Biden and unswerving global central bank support would cushion the coronavirus' damage and bolster growth.
The euro edged up as the European Central Bank's first policy meeting of the year brought no change to its supportive policies.
Asian stocks reached new highs overnight, Wall Street rose to touch new peaks and MSCI's global index of stock performance in 50 countries gained 0.28%.
But European stocks lost steam at the close, weighed down by oil and real estate shares, while the ECB warned a surge in COVID-19 infections posed a risk to the euro zone's recovery.
The pan-European STOXX 600 stock index ended flat after rising as much as 0.8% earlier in the session.
Energy majors BP, Royal Dutch Shell and Total each fell more than 2% as oil prices slipped after data showed a surprise increase in U.S. crude inventories. [O/R]
The three major indexes on Wall Street trended higher in early trade, though declining shares slightly outnumbered gainers. The S&P 500 posted 21 new 52-week highs and the Nasdaq Composite recorded 188 new highs.
This year's early trend of investors piling into cyclical stocks has reverted to buying of large-cap growth stocks that led last year's rally post-pandemic, said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
"It's a reverse of what's happened year-to-date through Tuesday. Today and yesterday were decidedly a growth market, especially big-cap tech plus," Ghriskey said.
"There's concern about distribution of the vaccine."
The Dow Jones Industrial Average rose 0.17%, the S&P 500 gained 0.22% and the Nasdaq Composite added 0.65%.
Graphic: Tech's dominance - https://fingfx.thomsonreuters.com/gfx/buzz/ygdvzaknkpw/Pasted%20image%201611232990710.png
Treasury yields were mostly higher and the yield curve steepened after U.S. labor market data showed new claims for jobless benefits, while elevated, declined modestly last week.
The data eased concerns that the U.S. labor market could deteriorate further, said Guy LeBas, chief fixed income strategist at Janney Capital Management in Philadelphia.
"Having a flat or slightly improved data point for the second week of January helps argue that the trend is not toward rising claims," LeBas said.
Italian and Spanish benchmark bond yields rose to their highest since early November, a move analysts attributed largely to the ECB saying it may not use the firepower of its pandemic-geared bond purchases in full.
The ECB kept its deposit rate unchanged at -0.5% and maintained the overall quota for bond purchases at 1.85 trillion euros, as expected.
The dollar index fell 0.303%, with the euro up 0.45% to $1.2158, amid expectations of a Biden stimulus push and after the Bank of Japan left its policies unchanged overnight.
The Japanese yen strengthened 0.03% versus the greenback at 103.52 per dollar.
The benchmark 10-year U.S. Treasury note rose almost 2 basis points to 1.1092%.
In commodity markets, oil prices eased on an unexpected rise in U.S. crude stockpiles, though hopes for an economic revival kept losses in check.
U.S. crude futures settled down 18 cents at $53.13 a barrel, while Brent futures rose 2 cents to settle at $56.10 a barrel.
Industrial metals such as copper, nickel and iron ore all rose, while spot gold slid 0.1% to $1,864.66 per ounce.
U.S. gold futures settled little changed at $1,865.90 per ounce.
Graphic: Political risk forecast - https://fingfx.thomsonreuters.com/gfx/mkt/azgpolajzvd/Pasted%20image%201611233726759.png
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(Reporting by Herbert Lash; additional reporting by Marc Jones in London; Editing by Dan Grebler)
