European stocks rallied Monday on optimism over quantitative easing in the eurozone, with Frankfurt topping 12,000 points for the first time, but the euro recovered after hitting another 12-year dollar low.
Germany`s leading stock market index smashed through the psychologically important level, one week after the European Central Bank began its 1.14-trillion-euro (USD 1.201-trillion) bond-buying stimulus.
Frankfurt`s benchmark DAX 30 soared 2.24 percent to a new record close at 12,167.72 points. The DAX has gained 24 percent since the beginning of the year.
London`s FTSE 100 index rose 0.94 percent to close at 6,804.08 points, and the CAC 40 in Paris climbed 1.01 percent to 5,061.16 points.
"The benefits of the ECB`s QE policy continue to drive European equities higher with the DAX leading the way," said market analyst Alastair McCaig at traders IG.
"Germany continues to spearhead the move higher for the rest of the eurozone."
Wall Street also rose on Monday ahead of an eagerly awaited US Federal Reserve meeting this week. At mid-day in New York the Dow Jones Industrial Average was up 0.99 percent to 17,924.79 points, the broad-based S&P 500 also gained 0.99 percent to stand at 2,073.63 and the tech-rich Nasdaq Composite Index added 0.86 percent to 4,913.64.
In foreign exchange activity, the euro rebounded after hitting a fresh 12-year low against the dollar at USD 1.0458 in earlier Asian trading hours, its lowest level since early January 2003. But the European single currency later recovered to USD 1.0608, up from USD 1.0489 late in New York on Friday. Investors are keeping their focus on the Fed`s policy meeting Wednesday, seeking a clearer timeline for when it will raise interest rates as the US economy strengthens.
"The relentless climb of the US dollar will come under further scrutiny this week as the US Federal Reserve meets," said Currencies Direct dealer Alistair Cotton.
"The market is looking for changes to the wording of the press release, with the possible removal of the word `patient` from language about rate hikes to indicate that we remain on course for a first rate increase in June."
Global markets took a hit last week and the dollar rallied in reaction to a strong US jobs report that increased the likelihood of a summer rate rise.
But while equities have settled, the euro has also been battered by the ECB`s new bond-buying stimulus programme.
"The divergence in policy expectations between the Fed and the ECB has been the primary driver of downside pressure in euro/dollar," noted Rabobank analyst Jane Foley.
"However, the start of QE from the ECB has also provided fresh incentive to eurozone stock markets."
In Asia on Monday, Shanghai was the stand-out stock market, extending last week`s gains after Chinese Premier Li Keqiang said the government had enough in its armoury to support the world`s number two economy.
Shanghai jumped 2.27 percent to 3,449.31 -- its highest since August 2009 -- and Hong Kong added 0.53 percent.
Tokyo`s Nikkei, which on Friday closed above 19,000 points for the first time in 15 years, edged down by 8.19 points to finish at 19,246.06.
Sydney dropped 0.29 percent, while Seoul was marginally higher.
