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European stocks rally

FXStreet (Mumbai) - The European stock markets rallied tracking gains in both the US and Asia, where the markets were buoyed by an upbeat US GDP report and the surprise stimulus expansion by Bank of Japan (BOJ).

The Dax is up 1.77%, while the London’s Ftse is up 1.18%. The French equity markets have gained 2.00%. Meanwhile, the Stoxx Europe 600 gained nearly 1.2% in early trade. In Asia, the Nikkei ended the day at its highest level since November 2007 after the central bank surprised the markets by announcing an expansion of its stimulus program.

The resulting “risk-on rally” was further cemented by the news that Japan’s $1.2 trillion Government Pension Investment Fund intends to reduce its target allocation of bonds from the current 60% to nearly 30%. Moreover, a reduction in the allocation for bonds means more allocation for the domestic and international stock market.

Amid the BOJ news, earnings season continued to dominate the market sentiment. Shares in French bank BNP Paribas SA rose after the bank reported an 11% jump in third-quarter net profit. Elsewhere, Royal Bank of Scotland PLC swung to a third-quarter net profit.

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