Global stock markets rose sharply Monday as governments relaxed coronavirus lockdowns and investors were willing to bet that the world economy has seen the worst of the pandemic's impact.

A joint French-German plan for a massive EU relaunch programme worth a staggering 500 billion euros ($542 billion), announced just before European markets closed gave them an extra push over the finishing line.

Oil prices surged back above $30 per barrel and gold rose to levels not seen in more than seven years.

"It has been a very optimistic start to the new week with stocks, crude oil, copper, gold and silver all pushing higher," said Fawad Razaqzada at ThinkMarkets.

Traders also not only brushed off a warning from the head of the Federal Reserve that a full recovery would likely not come until next year, but took the statement as a sign that more central bank stimulus is coming, further fuelling their appetite for stocks.

"Sentiment has been boosted as many European countries including Spain, Italy and the UK reported the lowest number of Covid-19 related deaths for two months at the weekend and as several countries ease lockdown restrictions," Razaqzada said.

On Wall Street, the Dow Jones index was more than 800 points higher by the late New York morning, while key eurozone markets were more than five percent up at the close, with London up over four percent.

"As lockdown easing progresses, investors continue to value companies as if the global economy has already hit its low point," said Jasper Lawler at London Capital Group.

Sentiment was also boosted by US biotech firm Moderna reporting "positive interim" results on Monday in the first clinical tests of its vaccine against the new coronavirus performed on a small number of volunteers.

"Risk appetite is running wild after Moderna's experimental vaccine showed promising early signs to create an immune-system response that might be able to fight off COVID-19," said Edward Moya at OANDA.

Major markets in Asia had closed higher earlier Monday, but by much lower percentages than subsequently posted by European and US markets.

Neil Wilson at Markets.com said gold, which hit a high last seen in October 2012, had "emerged as a clear winner from the economic turmoil created by the pandemic"

The benchmark US oil contract was meanwhile up by more than 10 percent on the day in the late European afternoon.

German top-tier football returned at the weekend, as several countries slowly ease up on lockdown restrictions that have battered the global economy
German top-tier football returned at the weekend, as several countries slowly ease up on lockdown restrictions that have battered the global economy POOL / Holger Schmidt

But analysts were quick to warn that the party may not last for very long.

"While it may be risk on for now, things could turn negative later on today or the week," Razaqzada said.

"Renewed macro concerns and/or further escalation in the war of words between the US and China could easily undermine risk appetite."

The British pound dipped after Bank of England chief economist Andy Haldane hinted at negative interest rates, but later recovered.

London - FTSE 100: UP 4.3 percent at 6,048.59 points (close)

Frankfurt - DAX 30: UP 5.7 percent at 11,057.87 (close)

Paris - CAC 40: UP 5.2 percent at 4,498.34 (close)

EURO STOXX 50: UP 5.1 percent at 2,911.88

New York - Dow: UP 3.5 percent at 24,510.91

Tokyo - Nikkei 225: UP 0.5 percent at 20,133.73 (close)

Hong Kong - Hang Seng: UP 0.6 percent at 23,934.77 (close)

Shanghai - Composite: UP 0.2 percent at 2,875.42 (close)

Brent North Sea crude: UP 9.2 percent at $35.49 per barrel

West Texas Intermediate: UP 11.0 percent at $32.78 per barrel

Euro/dollar: UP at $1.0868 from $1.0820 at 22100 GMT

Dollar/yen: UP at 107.38 yen from 107.06

Pound/dollar: UP at $1.2198 from $1.2116

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