World Stocks Rally, Dollar Up

Stock markets rallied on Monday and the US dollar hit a two-month high against the yen, as robust economic data from the United States and Germany left investors increasingly confident about the strength of the world economy.

Focus also turned to Federal Reserve chief Janet Yellen's semi-annual testimony on monetary policy and a meeting of Canada's central bank on Wednesday for the latest signals on policy from major central banks, news outlets reported.

For now, unease about an end to an era of ultra-cheap money has given way to optimism about global growth, with Friday's stronger-than-expected US non-farm payrolls report bolstering risk appetite. Data on Monday showed exports from Germany, Europe's biggest economy, rose more than expected in May.

The pan-European STOXX 600 rallied 0.4%, with banks and utilities the strongest sectors. Blue-chip stock markets in London, Paris and Frankfurt climbed 0.2 to 0.5%.

They followed gains in Asia, where MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3% and Japan's Nikkei gained 0.8% to a one-week high, helped by weakness in the Japanese currency.

Chinese stocks inched lower as investors awaited a raft of data due out next week. The benchmark Shanghai Composite index dropped 5.32 points or 0.17% to 3,212.63 while Hong Kong's Hang Seng index was up 159 points or 0.63% at 25,500 in late trade.

Consumer prices in China rose an annual 1.5% in June, the National Bureau of Statistics said. That was unchanged from the May reading, but shy of expectations for a score of 1.6%. The produce price index rose 5.5%—unchanged and in line with expectations.

Japanese shares closed notably higher as a weaker yen helped lifted exporters, helping offset weak current account and core machine orders data, RTTnews reported.

Australian shares eked out modest gains, driven higher by banks and retailers. The benchmark S&P/ASX 200 closed 0.36% higher at 5,724.40 to snap three days of losses. The broader All Ordinaries index inched up 0.33% to 5,762.90.

Seoul shares ended almost on a flat note as investors waited for cues from the quarterly earnings season. The benchmark Kospi inched up 2.23 points or 0.09% to 2,382.10.

MSCI's emerging markets benchmark posted its best day in two weeks. US stock futures were largely flat after strong gains on Wall Street on Friday.

The dollar rose almost 0.4% to 114.29 yen, a two-month peak, while the dollar index—which measures the dollar's value against a basket of other major currencies—was a touch firmer at 96.142. The euro was softer at $1.1388.

Oil prices declined, extending losses at the end of last week on the back of high drilling activity in the United States and ample supplies from OPEC and non-OPEC nations.

Brent crude futures LCOc1, the international benchmark for oil prices, were at $46.27 per barrel, down 50 cents, or around 1%, from their last close.