Investing.com – European stock markets climbed strongly Tuesday, helped by further signs central banks will continue to support the global economy in the wake of the damage caused by the coronavirus pandemic.

At 4:30 AM ET (0810 GMT), the DAX in Germany traded 2.1% higher, France’s CAC40 rose 1.8%, the U.K.’s FTSE index was up 2.3%.

The U.S. Federal Reserve said late Monday it will soon start purchasing individual corporate debt, extending a program that previously had been limited to purchasing bond exchange traded funds. 

The Bank of Japan followed earlier Tuesday by extending its corporate lending package to around $1 trillion. The focus will soon turn to Thursday’s monetary policy meeting of the Bank of England, particularly after Tuesday’s unemployment dataemphasised the country’s difficult economic circumstances.

Additionally, European Central Bank board member Fabio Panetta urged the European Union to urgently decide on a package of fiscal measures to help the bloc through its pandemic-induced economic crisis.

The EU proposed a 750 billion euro package last month, including 500 billion in grants, but resistance from a handful of fiscally conservative nations has threatened to delay the deal and no agreement in June is now expected.

Global equities had fallen sharply due to worries about the U.S. economy and confirmation of a new coronavirus cluster in China.

However, the Fed’s move and data showing the outbreak in Beijing was being tamed–27 new coronavirus cases reported on Monday, down from 36 new cases the previous day–helped equities head higher.

German consumer price inflation remained in negative territory in May, which will concern the European Central Bank with its inflation-based mandate.

In corporate news, travel stocks including cruise-ship operator Carnival (LON:CCL) and International Consolidated Airlines Group (LON:ICAG) posted strong gains. 

One outlier was German online fashion house Zalando, which fell 5.1% after strategic shareholder Kinnevik said it would sell a 4.2% stake through an accelerated bookbuilding process.

Oil prices have edged higher, helped by the renewed enthusiasm in the equity markets, but gains are tentative.

At 4:10 AM ET, U.S. crude futures traded 0.1% higher at $37.14 a barrel. The international benchmark Brent contract rose 0.4% to $39.88.

Elsewhere, gold futures rose 0.4% to $1,735.90/oz, while EUR/USD traded at 1.1325, up 0.1%.

TOKYO (Reuters) – The Bank of Japan kept monetary settings steady on Tuesday and stuck to its view that the economy will gradually recover from the coronavirus pandemic, signalling that it has taken enough steps to support growth for now.

However, it increased the nominal size of its lending packages for cash-strapped firms to $1 trillion from about $700 billion announced last month.

While the BOJ remains focused on steps to ease corporate funding strains, Governor Haruhiko Kuroda may offer hints on how it will deal with longer-term issues such as how to fire up growth and inflation when the pandemic begins to subside.

“Given markets have calmed down and the economy appears to be bottoming out, there’s no reason for the BOJ to take action anytime soon,” said Hiroshi Shiraishi, senior economist at BNP Paribas (OTC:BNPQY) Securities.

“Fiscal policy will play a main role in responding to the virus fallout, so the central bank will continue to indirectly help the government by keeping borrowing costs low,” he said.

In a widely expected move, the BOJ maintained its yield curve control targets at -0.1% for short-term interest rates and 0% for long-term rates.

The central bank also made no major changes to its programmes to ease corporate funding strains, including a lending facility aimed at channeling funds to firms.

Due to the way it is designed, the amount of money to be pumped out via the programmes will reach 110 trillion yen ($1 trillion) if more loans are taken out via government schemes, the central bank said.

That was larger than an estimate of 75 trillion yen made in May, as the government expanded the range of eligible loans under a second stimulus package.

The BOJ is among a host of major central banks that have pumped trillions of dollars into financial systems to support businesses hit by the coronavirus pandemic.

Finance Minister Taro Aso praised the BOJ’s money printing, telling reporters on Tuesday the central bank’s lending facilities “undoubtedly led to an increase in money supply.”

Markets have widely expected the BOJ to stand pat after it expanded stimulus in March and April, mainly by boosting asset purchases and creating lending facilities to channel money to companies hit by slumping sales from the pandemic.

Prime Minister Shinzo Abe declared a state of emergency in April, requesting businesses to close and citizens to stay home, a move that dealt a severe blow to consumption.

The emergency was lifted in late May, but analysts expect the economy to have contracted more than an annualised 20% in the current quarter, after having slipped into recession.

The BOJ maintained its guarded optimism on the outlook and stressed its readiness to ease policy again if needed.

“Although economic activity will gradually resume, Japan’s economy will remain in a severe state for the time being,” the central bank said in a statement.

“Once the impact of the pandemic subsides, the economy is likely to improve” due to an expected rebound in consumption and output, as well as the boost from government stimulus, it said.

TOKYO (Reuters) – Asian shares and Wall Street futures rallied on Tuesday as the formal start of the Federal Reserve’s corporate bond buying programme boosted global investor sentiment and calmed earlier worries about a second wave of coronavirus infections.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2.2%, its biggest one-day gain since June 1. Australian stocks rose 3.0%, while shares in China rose 1.2%.

U.S. stock futures, the S&P 500 e-minis, were up 0.98% following a late rally on Wall Street on Monday. Treasury yields rose and the yield curve steepened.

The Fed said it will start purchasing corporate bonds on Tuesday in the secondary market, one of several emergency facilities launched in the wake of the coronavirus pandemic.

Global equities had fallen sharply from late last week due to worries about the U.S. economy and confirmation of a new coronavirus cluster in Beijing.

However, the Fed’s corporate bond purchases and data showing new infections in Beijing are under control helped equities quickly reverse course and head higher.

“Equities were overbought and corrected lower, but the S&P 500 has bounced off support because of the Fed,” said Shane Oliver, head of investment strategy and chief economist at AMP (OTC:AMLTF) Capital Investors in Sydney.

“The markets will continue to go higher a long as economies continue to reopen and as long as the number of coronavirus cases is not large enough to stop the reopening.”

Sentiment in Asia got a further boost after health officials said there were 27 new coronavirus cases in Beijing, down from 36 new cases the previous day.

Japan’s Nikkei stock index and shares in South Korea were both on course for their biggest daily gain in two months.

The Australian dollar rose 0.31% to $0.6942. The Aussie is often traded as a liquid proxy for risk because of its close ties to China’s economy and global commodities.

The yen was little changed at 107.32 per dollar before a Bank of Japan meeting ending later on Tuesday.

No major policy moves are expected, but some investors will focus on any comments about the global debate on capping government bond yields.

The Fed on Monday also announced eagerly-awaited details of its programme to lend funds directly to companies.

Benchmark 10-year Treasury yields notes edged up to 0.7363%, while the spread between two-year and 10-year yields widened to 54 basis points in a sign of improving risk appetite.

Crude oil futures erased gains and fell amid persistent doubts over whether supply cuts would be enough to reduce an oil glut.

U.S. crude fell 1.2% to $36.68 a barrel. Brent crude declined by 1.2% to $39.23 per barrel.