HONG KONG/LONDON – Global shares extended a recent rally on Thursday while safe-haven bonds and currencies eased as markets welcomed signs that the Omicron variant of COVID-19 might be less severe than feared, as well as robust US economic data.

The STOXX index of Europe's 600 largest shares rose 0.3 percent, following earlier gains in Asia. Japan's Nikkei gained 0.57 percent and MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8 percent.

It put stock markets on course for a third successive day of gains as they recovered from a jolt on Monday when worries about the new coronavirus variant pushed investors to safe-haven assets like the greenback.

"The recent health data from the UK and other places around the world indicate that the worst case is unlikely: even though (Omicron) transmission rates are reportedly higher, this variant seems less virulent and less prone to cause serious illnesses or death," said David Chao, global market strategist Asia Pacific at Invesco.

The risk of needing to stay in hospital for patients with the Omicron variant of COVID-19 is 40-45 percent lower than for patients with the Delta variant, according to research by London's Imperial College published on Wednesday. 

European government bond yields continued to tick up as the trickle of risk sentiment flowing back into the market reduced the need for safe-haven debt. Germany's 10-year Bund yields hit -0.284 percent, their highest since late November.

Italian 10-year bonds likewise hit a one-month high in early trading.

Improving confidence

Meanwhile the main US benchmarks ended higher overnight after data showed US consumer confidence improved further in December, and the White House said it was resuming talks on a massive social spending and climate change bill with holdout senator Joe Manchin. 

While markets on both sides of the Pacific have risen this week, MSCI's broad Asian benchmark's gains began after they hit this year's low on Monday, while US benchmarks are in sight of last month's record highs.

Strong economic growth in the United States have driven investment away from Asia.

In currency markets, in line with the 'risk-on' mood, the dollar index dropped to as low as 96.018, its lowest since Dec 17, before recovering slightly to 96.128.

The dollar's recent losses have been fairly broad-based; the euro has gained for the last four sessions, and the Australian dollar – often seen as proxy for risk appetite – is up 1.2 percent on the week.

The yield on benchmark 10-year Treasury notes was last at 1.4618 percent, in the middle of its recent range.

Oil prices seesawed early on Thursday. Brent crude futures and US West Texas Intermediate (WTI) crude futures edged down 0.25 percent, after posting gains earlier in the day, as rising travel curbs in countries including China and Australia sapped optimism generated by some positive Omicron news.

Spot gold rose 0.17 percent to 1,806 an ounce, helped by the softer dollar.