* BOJ surprises markets with aggressive easing measures
* World stocks rise on further stimulus hopes, US data
* US dollar falls broadly on money supply concerns
* Gold hits record high, commodities rise
(Updates with European markets close, data)
By Manuela Badawy
NEW YORK, Oct 5 (Reuters) - World stocks surged and the
U.S. dollar fell broadly on Tuesday after the Bank of Japan
unexpectedly cut interest rates, fueling speculation that other
governments will take additional actions to reinvigorate the
global economic recovery.
Gold hit another record high above $1,340 an ounce, copper
rose to its highest since July 2008 and oil rose to a two-month
high as the dollar, driven by investor concern over the outlook
for global growth, continued to weaken.
Risk assets soared on encouraging U.S. services sector
data, the BOJ's rate cut and the Reserve Bank of Australia's
decision not to raise rates, raising investor hopes that cheap
money will flood global economies. The Federal Reserve has
suggested it may engage in further quantitative easing unless
the U.S. economic outlook improves.
"Additional quantitative easing from the (Fed) remains the
market's preoccupation, and one that was given further fuel
with the overnight decision of the Bank of Japan to cut its
overnight rate," said David Ader, head of government bond
strategy at CRT Capital Group in Stamford, Connecticut.
The BOJ's measures -- cutting its overnight rate target to
virtually zero and pledging to buy 5 trillion yen ($60 billion)
worth of assets -- pushed the Nikkei average <> to close
1.5 percent higher. For details, see []
Tokyo's action came after Fed Chairman Ben Bernanke said on
Monday that more asset purchases could further ease financial
conditions and help the economy. []
The euro jumped to its highest since February against the
dollar on concerns that further U.S. quantitative easing could
undermine dollar strength.
U.S. stocks rose after data showed the pace of growth in
the U.S. services sector, which accounts for 80 percent of U.S.
jobs, accelerated last month more quickly than economists had
expected and hiring also picked up. []
The Dow Jones industrial average <> was up 163.89
points, or 1.52 percent, at 10,915.16. The Standard & Poor's
500 Index <.SPX> was up 20.22 points, or 1.78 percent, at
1,157.25. The Nasdaq Composite Index <> was up 47.09
points, or 2.01 percent, at 2,391.61.
"Given unemployment and the state of the housing market,
central banks didn't have a choice but to take steps like this,
and it's what the market wanted to see," said Uri Landesman,
president at the New York-based Platinum Partners. "This could
be a sign of things to come."
The pan-European FTSEurofirst 300 <> index of top
European shares closed up 1.4 percent at 1,066.12 points.
World stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS> rose 1.61 percent, while the Thomson Reuters
global equity index <.TRXFLDGLPU> rose 0.16 percent.
DOLLAR SUFFERS
In currencies, a dollar index <.DXY> was down against major
currencies, falling 0.74 percent to 77.865 after hitting an
8-1/2 month low. The euro <EUR=> was up 1.05 percent at $1.3823
after climbing as high as 1.3830. Against the Japanese yen, the
dollar <JPY=> was down 0.04 percent at 83.31 after going as low
as 82.96 yen on electronic trading platform EBS <JPY=EBS>.
The prospect of further quantitative easing from the Fed
modestly supported U.S. Treasury prices somewhat.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
3/32, with the yield at 2.467 percent. The 2-year U.S. Treasury
note <US2YT=RR> was unchanged with the yield at 0.411 percent.
The 30-year U.S. Treasury bond <US30YT=RR> was down 4/32, with
the yield at 3.716 percent.
The Australian dollar <AUD=> fell 0.9 percent to $0.9594
after its central bank left interest rates steady for a fifth
month, confounding expectations of a rise [].
Some analysts said the Australian dollar's recent strength
might have given the Reserve Bank of Australia reason to pause,
while speculation of U.S. and British quantitative easing may
have made it cautious.
Central banks in Japan, the United States and Britain have
been under political pressure to do more to support economies
showing only tepid recovery from the worst recession in
decades.
In Japan, slowing export growth, a surprise fall in factory
output and companies' worries about the strong yen have
strengthened the case for the BOJ to ease policy. Last month
the authorities intervened in the currency market to curb the
yen's strength.
The U.S. currency has fallen 10 percent this year against
the yen.
Governments' ultra loose monetary policies may debase the
value of currencies and are leading to continued demand for
gold and the rise of other commodities.
Gold <XAU=> was pushed higher by concern about more
monetary easing and possibly higher long-term inflation. The
precious metal hit another record high bid at $1,341.20 an
ounce. Oil prices <CLc1> rose more than 1 percent to $82.58 a
barrel, and copper prices <CMCU3> rose to $8,197 per tonne. Tin
<CMSN3> rose to a new all-time high at $26,000 a tonne,
platinum, aluminium, zinc, lead and nickel touched multi-month
highs.
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Global interest rates: http://link.reuters.com/wed86p
BOJ policy rate: http://link.reuters.com/syz76p
Yen - taking on the market: http://r.reuters.com/fac44p
BOJ balance sheet/JGB buying: http://link.reuters.com/ger94p
RBA rates and commodity index: http://link.reuters.com/byg86p
Chronology of BOJ policy moves: []
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(Additional reporting by Chris Reese, Ryan Vlastelica in New
York and Dominic Lau in London; Editing by Kenneth Barry)
