New York (AFP) - Stock markets mostly moved higher on Thursday as banking sector worries eased and traders weighed central banks' interest rate plans in the wake of recent turmoil.
Investors have taken to heart reassurances by authorities around the world that fallout from the collapse of US regional banks and the takeover of Credit Suisse has been contained.
"Worries about the banking industry continue to ease, offering support to the broader market," said market analyst Patrick O'Hare at Briefing.com.
Cooling inflation in Europe also boosted hopes for a pause in interest rate hikes.
"Fresh from their triumph yesterday, stocks have barreled into a second day of gains, with the catalyst being the much weaker Spanish inflation reading this morning," said Chris Beauchamp, chief market analyst at online trading platform IG.
Wall Street's main indices climbed, European stock markets closed higher and Asian markets ended the day mostly in the green as well.
The banking flare-up has fanned speculation that the US Federal Reserve will have to end its inflation-fighting rate-hike campaign sooner than expected in order to avoid further destabilizing the finance industry.
Some investors now predict the central bank will cut borrowing costs by year-end.Some forecasts put the rate at just above four percent by 2024, compared with more than five prior to the recent upheaval.
That has focused eyes on the Fed's next policy meeting, with observers predicting it could mark the last increase, even though inflation is still high.
"The Fed remains in a very difficult position," said Wolfe Research's Chris Senyek.
"With banks stabilizing, inflation still way above target, the labor market still historically strong, and the Fed desperately needing to rebuild credibility, our sense is that the (policy board) will hike by 25 basis points on May 3," he added.
US and eurozone inflation data due Friday should provide a clearer idea of whether monetary policymakers will have more flexibility in terms of pausing rate hikes.
Data on Thursday showed inflation slowing to 7.4 percent in March in Germany, Europe's biggest economy, down from 8.7 percent in the two previous months.
Inflation eased to 3.3 percent in Spain.
Some analysts believe the latest woes among banks, which have been blamed on sharp increases in rates, will force lenders to tighten access to credit which will in turn reduce the need for the Fed to hike further.
"The good news for stocks is that growth concerns have moved into the driver's seat after the recent banking shock, where investors are now positioning for the Fed to cut and instead rely on credit tightening to tame inflation," said SPI Asset Management's Stephen Innes.
The softer outlook for future US interest rates weighed on the dollar, which was down against most of its major peers.
The weaker greenback also helped dollar-denominated oil prices reverse earlier losses.
Shares in British energy infrastructure group Petrofac soared 70 percent after it and Hitachi Energy secured a multi-billion-euro deal to expand offshore wind capacity in the Dutch-German North Sea.
The Hong Kong index rose as Alibaba extended gains after surging 12 percent Wednesday on news the Chinese tech giant intends to split into six units.
Key figures around 2100 GMT
New York - Dow: UP 0.4 percent at 32,859.03 (close)
New York - S&P 500: UP 0.6 percent at 4,050.83 (close)
New York - Nasdaq: UP 0.7 percent at 12,013.47(close)
London - FTSE 100: UP 0.7 percent at 7,620.43 (close)
Frankfurt - DAX: UP 1.3 percent at 15,522.40 (close)
Paris - CAC 40: UP 1.1 percent at 7,263.37 (close)
EURO STOXX 50: UP 1.3 percent at 4,285.42 (close)
Tokyo - Nikkei 225: DOWN 0.4 percent at 27,782.93 (close)
Hong Kong - Hang Seng Index: UP 0.6 percent at 20,309.13 (close)
Shanghai - Composite: UP 0.7 percent at 3,261.25 (close)
Euro/dollar: UP at $1.0910 from $1.0845 on Wednesday
Pound/dollar: UP at $1.2385 from $1.2316
Euro/pound: UP at 88.03 pence from 88.01 pence
Dollar/yen: DOWN at 132.67 yen from 132.85 yen
Brent North Sea crude: UP 1.3 percent at $79.27 per barrel
West Texas Intermediate: UP 1.9 percent at $74.37 per barrel
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