London: World stocks rallied, halting the worst three-day global slump since March, after US Federal Reserve chairman Ben S. Bernanke said he’s prepared to provide more stimulus if needed and China’s economic growth beat estimates. Irish bonds tumbled, while gold climbed to a record.
The MSCI All-Country World Index increased 1.1% at 10.13am in New York after tumbling 3.4% in the previous three sessions.
Ireland’s two-year yield jumped 140 basis points to 19.13% after Moody’s Investors Service cut the nation’s credit to junk.
The euro strengthened 0.9%, while gold futures rose as much as 1.4% to $1,583.70 an ounce.
Chinese shares rebounded from the biggest slump in seven weeks after the nation’s economy grew 9.5% in the second quarter. China’s data helps risk appetite in general, said Goh Puay Yeong, a Singapore-based strategist at Credit Suisse Group AG.
The Irish-German 10-year spread widened 43 basis points to a euro-era record of 1,107 basis points after Moody’s cut Ireland to Ba1 from Baa3, citing the probability that the country will need additional financing before it can return to the private market to borrow.
Ireland is the third euro-region nation to be cut to below investment grade by a ratings company, joining Greece and Portugal.
Credit-default swaps insuring Irish bonds rose 62 basis points to 1,062, signalling a 61% chance of the government failing to pay in the next five years.
Claudia Carpenter, Mark Gilbert, Abigail Moses, Michael Patterson, Andrew Rummer and Dan Tilles in London contributed to this story.