US stocks were indicating a higher open on Wall Street and world stocks eyed their first weekly gain in eight weeks after this week's Federal Reserve minutes dampened fears of mega-high interest rates.
Optimistic US earnings outlooks from department store operator Macy's Inc and discount chains Dollar General Corp and Dollar Tree boosted US stocks on Thursday.
The Fed's minutes of its May meeting released on Wednesday confirmed two more 50-basis-point hikes each in June and July, but policymakers also suggested the potential for a pause later in the year.
"It's all flowed through from the FOMC (Federal Open Market Committee) minutes," said Giles Coghlan, chief currency analyst at HYCM.
"Investors were relieved there wasn't a 75 basis points hint."
Markets would focus on the April core PCE price index for the United States - the Fed's preferred inflation measure - due later on Friday for further signs on whether inflation was running hot, Coghlan added.
S&P futures rose 0.33 per cent after the Dow Jones Industrial Average rose 1.61 per cent, the S&P 500 gained 1.99 per cent, and the Nasdaq Composite jumped 2.68 per cent on Thursday.
The MSCI world equities index rose 0.41 per cent. It was heading for a 3.2 per cent rise on the week and an almost 6 per cent recovery from 18-month lows set two weeks ago.
Global equity funds saw inflows in the week to May 25 for the first week in seven, according to Refinitiv Lipper.
European shares hit a three-week high and were up 0.86 per cent. Britain's FTSE also hit a three-week high, and was heading for its best weekly showing since mid-March.
Hong Kong shares rose 2.9 per cent after better-than-expected first-quarter revenue growth from Alibaba and Baidu .
Asian shares also benefited from hopes of stabilising Sino-US ties and more Chinese government stimulus.
The United States would not block China from growing its economy, but wanted it to adhere to international rules, Secretary of State Antony Blinken said on Thursday in remarks that some investors interpreted as positive for bilateral ties.
Japan's Nikkei advanced 0.7 per cent, China's mainland blue-chips rose 0.2 per cent,and Australia's resources-heavy index climbed 1.1 per cent.
The swing in sentiment drove the dollar to one-month lows against an index of currencies before it reversed some losses to stand 0.17 per cent higher.
The dollar is down 3.4 per cent from 20-year highs hit earlier this month. The euro reached a one-month high before slipping 0.24 per cent.
Oil prices were near two-month highs on the prospect of a tight market due to rising petrol consumption in the United States in summer, and also the possibility of an EU ban on Russian oil.
But they fell on Friday, with US crude down 0.29 per cent to $113.74 a barrel. Brent dipped 0.04 per cent to $117.35 per barrel.
The yield on benchmark 10-year Treasury notes dipped 3 basis points to 2.7289 per cent. It had hit a three-year high of 3.2030 per cent earlier this month on fears rapid hikes from the Fed might undermine long-term growth.
The two-year yield, which rises with traders' expectations of higher fed fund rates, fell 2 bps to 2.4618 per cent.
"All in all, a pronounced decompression of stress," said analysts at ING in a note.
Australian Associated Press
Sign up for our newsletter to stay up to date.