Global stock markets rallied on Tuesday, encouraging investors to dump bonds as a new round of mergers helped them put aside concerns about tightening credit conditions and deteriorating security. Wall Street marched higher out the gates with the major averages racking up gains above 0.3 percent following a blockbuster Monday.
The latest in a raft of deals, Kraft Foods Inc. is in exclusive talks to buy Danone's biscuit and cereal unit for $7.20 billion in cash. The renewed appetite for mergers has helped quell fears that higher borrowing costs would crimp that buyout boom that has supported a surge in equity valuations this year.
Such buoyant sentiment helped take MSCI's index of world stocks to a new all-time high, encouraged by a recent pullback in bond yields. Analysts also cited signs that business spending may be holding up as underpinning the stock market, including a smaller-than-expected decline in US factory orders in May.
In Europe, the pan-European FTSEurofirst 300 index rose 0.8 percent to its highest close since June 20, boosted by mergers and acquisition activity. Japan's Nikkei rose for a fourth straight session as shares of exporters gained.
Currency markets were relatively steady ahead of the US July 4th Independence Day holiday, with the dollar gaining some traction following two sessions of steep declines. The greenback rose against a basket of six major currencies, but edged down to a fresh 26-year low against sterling.
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