As China plans tariff cut,stocks rally worldwide,safe haven currencies drop

World equity markets rallied for a fourth day on Thursday, with a bevy of key stock indexes touching fresh peaks, as news that China will soon cut tariffs on some US goods buoyed risk sentiment and pushed safe-haven currencies lower.

The yield on Germany's benchmark 10-year Bund touched its highest in almost two weeks and US Treasury yields ticked higher as investors bet China's efforts to contain a fast-spreading coronavirus would mitigate the impact of the outbreak on the global economy.

US  Treasury Secretary Steven Mnuchin, in an interview with Fox Business Network, downplayed concerns that the outbreak could affect global supply chains, but acknowledged "this is something we're monitoring very carefully."

Major stock indexes, including the STOXX Europe 600 of small-, mid- and large-cap stocks, the benchmark US S&P 500 and Dow industrials on Wall Street, and the S&P/TSX composite in Toronto, set fresh records.

The yen slid to a two-week low against the dollar and the franc fell to its weakest in more than a week as investors hailed news China would halve tariffs on 1,717 US goods it imposed after the signing of a Phase 1 trade deal.

Many risk-off moves taken over the past two weeks are being unwound, said Simon Harvey, an FX market analyst at Monex Europe in London.

"We're seeing credible responses from monetary authorities in China and it looks like it's soothing market fears of a more entrenched slowdown in the Chinese economy," Harvey said.

MSCI's gauge of stocks across the globe gained 0.55% and its emerging market stocks rose 1.22%.

The pan-European STOXX 600 index rose 0.43%, helped by a swathe of strong earnings reports. Indexes in Frankfurt, Paris and London all gained, rising between 0.4% and 0.9%.

The Dow Jones Industrial Average rose 58.64 points, or 0.2 percent, to 29,349.49, the S&P 500 gained 9.54 points, or 0.29 percent, to 3,344.23 and the Nasdaq Composite added 50.24 points, or 0.53 percent, to 9,558.92.

Rebounding worker productivity in the fourth quarter and other U.S. economic data also lifted sentiment on Wall Street.

The number of Americans filing for unemployment benefits dropped to a nine-month low last week, indicating a tight labor market would keep the longest U.S" economic expansion in history on track despite weak business investment.

The dollar index rose 0.2%, with the euro down 0.21% to $1.0974. The yen weakened 0.13% versus the greenback at 109.98 per dollar.

Gold rose on expectations central banks will keep interest rates low. Spot gold added 0.5% to $1,563.71 an ounce.

Remarks by European Central Bank President Christine Lagarde that euro zone growth remains modest but there are signs of stabilization put upward pressure on bond yields in Europe.

Germany's Bund yield rose as much as 3 basis points to -0.339%, its highest in almost two weeks, before pulling back to around -0.39%.

Benchmark 10-year US Treasury notes fell 2/32 in price to yield 1.6543%.

Brent gave up early gains that were boosted by potential action from the Organization of the Petroleum Exporting Countries and allies led by Russia to counter faltering demand in China after the coronavirus outbreak.

Brent fell by 33 cents to $54.95 a barrel while West Texas Intermediate rose 28 cents to $51.03 a barrel.