LONDON: The dollar slid to three-year lows on Thursday and stocks firmed worldwide ahead of crucial U.S. GDP data, with investors betting ultra-loose American policy would continue to drive money into riskier assets.
The Federal Reserve said it would complete its $600 billion bond-buying programme in June but Chairman Ben Bernanke signalled it was in no rush to tighten monetary policy with the jobs market still in a "very, very deep hole".
The Bank of Japan also maintained its rock-bottom policy stance, moves that are likely to see both the dollar and yen used as funding currencies to buy higher-yielding assets, such as commodities and equities.
"With the prospect of ultra easy monetary policy continuing for the foreseeable future in the world's largest economy, traders are feeling more confident about holding the bullish view and risk appetite is expected to be high," said Jonathan Sudaria, a dealer at Capital Spreads in London.
European shares gained 0.2 percent with Deutsche Bank up 4.5 percent after it beat forecasts with a quarterly net profit at a near-record level.
World stocks as measured by the MSCI All-Country World Index were up 0.7 percent by 1045 GMT, Japan's Nikkei average rose 1.6 percent and U.S. stock futures suggested Wall Street's rally has further to run.
"The markets will be reassured, though the punch bowl is being replaced by a smaller punch bowl," Justin Urquhart Stewart, director at Seven Investment Management, said of the Fed's statement.
"But with today's GDP figures expected to be weaker, there will be a level of nervousness."
U.S. GDP data at 1230 GMT are expected to show growth slowed to a 2 percent annualised rate or less in the first quarter, from 3.1 in the last three months of 2010.
U.S. Treasury debt prices edged up in Europe supported by some expectations that U.S. growth will fall short of even that forecast, traders said.
Elsewhere in the debt markets, Greek government bond yields gyrated but were expected to move higher as investors become increasingly convinced a debt restructuring is looming.
Two-year yields fluctuated between 24 and 27.1 percent, having shot up 2 percentage points on Wednesday.
"There's no real turnaround in the sentiment, If you're talking about restructuring you really don't want to be there," one trader said.
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