World stocks higher as China boost lingers for now

CALIFORNIA: World stocks rallied on Monday, with sentiment supported by China's efforts to shore up its battered markets and lift confidence towards the world's No.2 economy. Europe's broad STOXX 600 index hit a two-week high, a day after posting its biggest one-day jump in about a month on China hopes. London's blue-chip FTSE rallied over 1%, playing catch-up after Monday's UK public holiday, while U.S. stock futures suggested a firm open for Wall Street later on .

All this followed a 1% gain in MSCI's broadest index of Asia-Pacific shares outside Japan and a 2% rally in Hong Kong stocks. Beijing at the weekend introduced a slew of measures to shore up the market, such as halving stock trading stamp duty, loosening margin loan rules and putting the brakes on new listings.

This has offered some respite to equity markets, rattled this month by fresh strain in China's property market as well as renewed selling in the U.S. Treasury market. Latest news however suggested China would remain a source of global market volatility.

China's largest private property developer Country Garden Holdings is seeking to add a 40-day grace period for the repayment of a 3.9 billion yuan ($535.3 million) private onshore bond due on Saturday, a document seen by Reuters showed. And pressure remained on China Evergrande. The builder which once traded above HK$30 a share, fell 10% to HK$0.31 in its second session back from suspension, highlighting the heavy doubts that remain over the country's debt-stricken property sector.

"September will reveal the true underlying sentiment in markets," said Nordea chief markets strategist Jan von Gerich. "There has been an initial jump in markets but these are still fine tuning measures and won't satisfy expectations for something bigger in terms of stimulus."

BIG WEEK Attention also turned to key monthly U.S. jobs data released at the end of the week. Job openings figures are due later on Tuesday and may offer some clues.

"There's anticipation of a bit of a slowing in the labour market and cooling of the inflationary pulse," said Ryan Felsman, senior economist at brokerage CommSec in Sydney. Speaking at last week's Federal Reserve annual symposium at Jackson Hole, Fed chief Jerome Powell said the U.S. central bank may need to raise interest rates further to ensure inflation is contained.

Ten-year U.S. Treasury yields are up 23 basis points this month and set for their biggest monthly jump since February as investors positioned for a higher for longer rates scenario. On Tuesday, 10-year yields drifted lower and were last down 3 bps to 4.17%, while two-year yields were down 2 basis points (bps) to 4.98%.

In currency markets, the euro was little changed at around $1.0809 and holding above 2-1/2 month lows hit last week. The yen remained pinned near Monday's 10-month low at around 146.75, for a loss of some 10% on the dollar this year.

Traders are wary that its weakness might soon prompt government intervention, and at 146.40 per dollar it was barely moved by a government report suggesting an inflection point in the country's years-long battle with deflation. In commodities, Brent crude futures were flat at $84.47 a barrel.

European gas prices might be set for a volatile session on a deepening standoff over pay and conditions at Australian gas rigs, with workers planning stoppages from next week. Benchmark Dutch prices are up 40% for August so far.