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World Markets Linger at New Highs, ECB Installs Confidence for Continued Liquidity

“(Reuters) – World shares hovered just off an all-time high and the euro was steady on Tuesday, as the European Central Bank made sure there was little doubt in investors minds that global liquidity will continue.

Britain’s FTSE 100 .FTSE opened up 0.3 percent as it played catch-up after a holiday. The rest of Europe’s main bourses .FTEU3, which saw mostly steady starts, had made gains on Monday following European election results.

Asian trading had been timid too, but another solid session for Japan’s Nikkei .N225 and shares in China, nudged MSCI’s 45-country all-world index up to 420 points leaving it just below its 2007 record high of 428.63 points.

Asset markets around the world continue to be supported by record-low interest rates in most of the world’s big economies.

ECB chief Mario Draghi on Monday bolstered the already-strong expectation that the bank will cut euro zone interest rates again next week and dip back into its unconventional policy cupboard.

Draghi said the ECB needed to be “particularly watchful” for any negative price spiral in theeuro zone, and that “more pre-emptive action may be warranted,” citing broad-based asset purchases as one of the ultimate options.

He is set speak again later in an ‘armchair’ discussion in the final day of the ECB forum underway in Portugal, along with a handful of the bank’s other policymakers.

The easing expectations kept plenty of downward pressure on euro zone government borrowing costs in the region’s buoyant bond markets….”

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