German stocks surged to a record high on Monday as investors shrugged off a bounce by the euro and focussed on the expected boost to corporate earnings from the currency's recent slump, which saw it touch a 12-year low earlier in the day.
The DAX powered above 12,000 points for the first time and the main pan-euro zone benchmark indices hit seven-year highs, while U.S. futures pointed to a higher open on Wall Street of around 0.5 percent ESc1.
Wall Street looks set to rebound from last week's fall -- the third consecutive down week for U.S. stocks -- lifted by Europe's rally.
Any U.S. gains are likely to lag Europe's, an indication that investors fear U.S. corporate earnings will feel the pinch from the dollar's recent strength. Investors are also bracing for the Federal Reserve's policy decision on Wednesday.
"As the steroid injection of ECB QE continues to swell the DAX, as well as the other euro zone indices, investors remain enthralled with the region and seem committed to continuing its upswing," said Spreadex financial analyst Connor Campbell.
The European Central Bank last week started its 1.1 trillion-euro bond-buying "quantitative easing" programme, which has helped drag down bond yields to new lows and with them the euro.
Germany's DAX .GDAXI was up 1.2 percent at 12,042 points, France's CAC 40 .FCHI up three quarters of a percent at 5,048 points, and Britain's FTSE 100 index also up 0.5 percent at 6,776 points .FTSE.
The FTSEurofirst 300 .FTEU3 index of top European shares rose 0.75 percent to 1,590 points and the euro zone top 50 stocks index was up 0.9 percent at a seven-year high of 3,687 points .STOXX50E.
The euro was up a third of a percent against the dollar at $1.0530 EUR=. It had fallen to $1.0457 early in the Asian session, its lowest since January 2003.
The euro has lost roughly a quarter of its value against the dollar since mid-2014 and suffered its biggest weekly fall since September 2011 last week, shedding 3.2 percent as the ECB began its QE scheme.
Goldman Sachs now sees the euro at $0.80 by the end of 2017.
German 10-year Bund yields DE10YT=TWEB rose 2 basis points to 0.275 percent, having hit a record-low 0.188 percent last week. Longer-dated German yields fell, however, and benchmark Spanish, Italian and Portuguese yields were also headed back towards their recent record lows.
FED IN FOCUS
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed a few ticks higher, while Chinese shares outperformed to reach five-year-highs.
The CSI300 index .CSI300 and the Shanghai Composite Index .SSEC both rose more than 2 percent after Premier Li Keqiang said Beijing had scope to adjust policies to help boost the world's second-largest economy.
Japan's Nikkei hit a 15-year high of 19,349 points .N225
Recent weak U.S. inflation and retail sales data have not derailed expectations that the Fed will tighten monetary policy. Expectations that higher rates and a stronger dollar will hit U.S. corporate profits have dragged on shares.
Many observers expect the Fed to remove its pledge to remain "patient" about raising rates for the first time since 2006. Economists polled by Reuters split almost evenly on whether a first increase will come in June or later in the year.
"We expect the Fed to end forward guidance by dropping the 'patience' language in favor of language that highlights that the economic outlook warrants a gradual removal of policy accommodation," said Barclays economists in a note.
"While such an outcome does not necessarily mean that the first rate hike will come in June, (we) think the outlook for employment and activity is robust enough to warrant it."
Oil prices continued to tumble, with U.S. crude dropping more than 2 percent at one point to a six-year low on expectations of oversupply. The International Energy Agency said on Friday a global glut of oil is growing and U.S. production shows no sign of slowing.
U.S. crude CLc1 was last down about 1.4 percent at $44.20 a barrel, while Brent LCOc1 was 1.3 percent lower at $53.96.
After snapping its longest daily losing streak since 1973 on Friday with a first rise in 10 sessions, gold resumed its fall, trading down 0.2 percent at $1,155 an ounce XAU=.
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