World stocks hit highest in a week as inflation scare fades

World stocks hit highest in a week as inflation scare fades

Earlier in Asia, an index of regional stocks excluding Japan rose 1.78%, led by a 2.3% surge in South Korea's Kospi, and was on track for its first three-day advance in three weeks.China's Shanghai Composite rallied 1.9%, helped by local lending data. Japan's Nikkei 225 gained 0.5%.E-mini futures for the U.S. S&P 500 index gained to their highest in two weeks, up 0.7%.Relative calm in the Treasuries market also helped risk sentiment, with the benchmark yield settling as low as 1.4750% after shooting to a one-year high above 1.6% last week as investors worried the U.S. economic recovery would run too hot."If we look at history, we see that when yields have gone up, after a while equity markets have generally been okay," said Justin Onuekwusi, portfolio manager at Legal & General Investment Management. "The only time you really see both equities and bonds sell off is in periods when there is a significant inflation scare."At this point ,with unemployment still so high, it is hard to see inflation becoming a problem, Onuekwusi said. Higher yields could be read as showing "that we are actually getting out of the quagmire we have been in.""And there is a natural yield cap