LONDON/TOKYO - World shares surged on Wednesday as the euro jumped to trade at 1.1022 against the dollar, up from 1.0932, while the STOXX 600 extended gains, rising 0.7 percent to reach its highest level since March 10. 

The European Commission proposed a package worth in total 1.85 trillion euros for the EU’s next long-term budget and a recovery fund for economies hammered by the coronavirus pandemic.

Yields of Italian, Spanish and Portuguese sovereign debt fell to multi-week lows.

MSCI’s index of the world’s 49 stock markets gained 0.3 percent, close to the two-and-a-half-month highs reached on Tuesday on hopes of economic recovery in the developed world as countries ease social restrictions after the COVID-19 crisis.

MSCI’s ex-Japan Asia-Pacific index fell 0.4 percent as Hong Kong and Chinese mainland shares extended declines.

Hong Kong's Hang Seng fell 1.0 percent and mainland shares were down 0.8 percent.

Brent crude LCOc1 futures dropped 1.6 percent to US$35.60. US West Texas Intermediate crude futures CLc1 were down 1.2 percent, at US$33.95 a barrel.

E-Mini futures for the S&P 500 ESc1 rose 1.2 percent to their highest point since March 6. The index had cleared 3,000 points in Wall Street overnight before earlier pulling back, as some traders returned to the New York Stock Exchange floor for the first time in two months.

The dollar, measured against a basket of currencies, edged down 0.2 percent to 98.788.

The Chinese yuan weakened to the lowest levels since early September in both onshore and offshore trade. The onshore renminbi slipped 0.3 to as low as 7.1595 per dollar; the offshore currency fell 0.4 percent to 7.1760 per dollar.

Anticipation of the EU recovery plan lifted Southern European bonds.

Italy’s 10-year bond yield fell to a seven-week low at 1.48 percent, while Spain and Portugal’s 10-year govt bond yields fell to eight-week lows.

US Treasury yields rose, with 10-year yields at 0.687 percent, up about 4 basis points from Tuesday.

Gold prices dropped to a two-week low, before paring some losses to trade down 0.1 percent to US$1,79.00 per ounce.