European stock markets smash records in oil-fuelled rally

"It's onwards and upwards for global stock markets," said Lee Wild, head of equity strategy at online stockbroker Interactive Investor.

"With economic data underpinning forecasts for strong global growth in 2018, traders are happy to keep buying risk assets."

The Dow shot past 25,000 - and was still comfortably clear of that milestone approaching midday in New York - as strong US private-sector hiring datasparked an extension of the stocks rally seen in the wake of enactment of US tax reform.

'BRAVE TRADER'

"Donald Trump may or may not have the biggest nuclear button in the world, but his country does currently have one of the strongest equity indices," said James Hughes at AxiTrader.

"It's currently a brave trader who bets against the strength in stock markets over the short to medium term as the juggernaut rolls on," he said.

London's benchmark FTSE 100 shares index of top companies also scored a record-high intra-day peak in afternoon deals, hitting 7,702.51 at one point, before paring gains towards the close.

Frankfurt's DAX 30 and the Paris CAC 40 also charged higher, with the energy sector jumping on strong crude oil prices, taking both indices around 1.5 per cent higher on the day.

"There are further gains for oil shares which continue to ride the coat-tails of a further increase in crude prices to levels not seen since mid-2015," said Wild.

IRAN BOOSTS OIL

"There have been major outages over the past few months in the North Sea and Libya, and now markets are pricing in an outside chance that domestic tension in Iran could threaten supply."

In Asia, Tokyo led another broad rally as soaring oil prices fuelled bumper gains for energy firms.

Japan's Nikkei index rose more than three percent higher on its first trading day for 2018 as investors played catch-up with two days of advances elsewhere.

Oil prices sprang to three-year highs on the back of a big freeze in the United States, tensions between major producers Iran and Saudi Arabia, and a weaker dollar.

Both main contracts jumped around two percent on Wednesday and extended those gains Thursday, albeit at a slower pace.

"Geopolitics has become a bigger factor now that the Iranian protest movement has launched into the open in the past week," said AxiTrader chief market strategist Greg McKenna.

He added: "My sense is there is some expectation that President Trump may use the protests as a pretext to reimpose sanctions on Iran and possibly unwind the deal the previous administration did which allowed Iran to increase its exports.

"That would take a significant number of barrels per day out of the market."

Data showing falling US oil stockpiles also underpinned the oil price.

DOLLAR PAIN

The dollar meanwhile held on to most of the previous day's gains against the yen, but lost more ground against the pound and the euro after minutes from the US Federal Reserve's December meeting showed policymakers upbeat about the outlook for the world's top economy, which could lead to several further interest rate hikes.

"This is certainly shaping up to be another painful trading week for the dollar," observed FXTM analyst Lukman Otunuga. "Bulls were nowhere to be found during Thursday's trading session, despite the release of yesterday's somewhat hawkish Federal Reserve minutes."

While analysts said the Fed board was divided over the speed of rises, they were confident Trump's tax cuts could boost consumer spending.

Eyes are now on the release of US jobs data on Friday.

Key figures around 1640 GMT:

London - FTSE 100: UP 0.3 per cent at 7,695.88 points (close)

Frankfurt - DAX 30: UP 1.5 per cent at 13,167.89 (close)

Paris - CAC 40: UP 1.6 per cent at 5,413.69 (close)

EURO STOXX 50: UP 1.7 per cent at 3,563.83

New York - DOW: UP 0.5 per cent at 25,055.79

Tokyo - Nikkei 225: UP 3.3 per cent at 23,326.06 (close)

Hong Kong - Hang Seng: UP 0.6 per cent at 30,736.48 (close)

Shanghai - Composite: UP 0.5 per cent at 3,385.71 (close)

Euro/dollar: UP at US$1.2069 from US$1.2014 late on Wednesday

Pound/dollar: UP at US$1.3543 from US$1.3515

Dollar/yen: UP at 112.78 yen from 112.52 yen

Oil - Brent North Sea: UP 45 cents at US$62.08 per barrel

Oil - West Texas Intermediate: UP 13 cents at US$67.97