Global stocks rallied Friday as oil prices staged a recovery and investors bet more stimulus from the world's central banks could help lift financial markets out of their new year's malaise.
Stocks in Europe moved higher for a second day, while stocks in Japan and Hong Kong soared on expectations of more stimulus from the European Central Bank and Bank of Japan.
The Stoxx Europe 600 was up 2% in early trade, building on gains of nearly 2% in the previous session.
European Central Bank President Mario Draghi hinted Thursday at more easing measures in March amid renewed pressure on inflation from falling oil prices.
Mr. Draghi "was a bit more dovish than I expected," said Daniel Bergvall, an economist at SEB. He was surprised by the bank's explicit reference to action at its next meeting as well as Mr. Draghi's comments that there were "no limits" to the instruments it could use to achieve its inflation goals.
The euro was last down 0.2% against the dollar at $ 1.0826.
Adding to the upbeat tone, Brent crude oil gained 5.3% to $ 30.78, boosting shares of energy and mining companies. While many economies stand to gain from low oil prices, stock markets around the world have increasingly reacted negatively to the decline amid concerns about its impact on inflation and the pressure it puts on oil-dependent economies and sectors.
Friday's gains in Europe came on the heels of an upbeat session in Asia, where Japan's Nikkei Stock Average closed 5.9% higher after steep losses earlier in the week. Traders said investors bet the Japanese yen would weaken, boosting shares of exporters. The dollar was last up 0.3% against the yen at ¥118.0800.
Meanwhile, investors were also betting on more stimulus from the Bank of Japan after Prime Minister Shinzo Abe's aide on Thursday said that "conditions for additional easing have fallen into place." Japan's central bank holds a meeting Jan. 28-29, and investors are betting it might increase its asset-purchasing program.
Elsewhere in Asia, the Shanghai Composite Index staged a late-session rally to end 1.3% higher, while Hong Kong's Hang Seng Index gained nearly 3% and Australia's S&P ASX 200 gained 1.1%.
Stocks had climbed on Wall Street on Thursday after a rocky start to the week, as oil prices gained and the ECB's dovish tone ramped up hopes for a further easing.
Still, many investors doubt the reprieve markets have seen late this week is likely to last amid steep falls in commodity prices, concerns about the pace of Chinese growth and its impact on the world economy, and the ability of the U.S. economy to weather the turmoil in financial markets as the Federal Reserve lifts interest rates.
Both the Dow industrials and the S&P 500 are down nearly 9% so far this year.
Meanwhile, some investors doubt whether Mr. Draghi will deliver on his promises after disappointing markets in December, and others question whether further stimulus would make much difference.
"The ECB has been able to shield the European recovery" from turmoil in financial markets and appreciation of the euro, "but there's a limit to what they can do," said Philippe Gudin, chief European economist at Barclays. Mr. Gudin said there is very little room for further cuts to the deposit rate or an expansion of the bank's quantitative-easing program, so the impact of further stimulus "won't be major."
— Chao Deng contributed to this article
Write to Riva Gold at riva.gold@wsj.com
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