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Global markets surge as year-end rally continues

AMSTERDAM/HONG KONG--Global markets surged Friday following a strong U.S. session and news seen as good for stocks from both Japan and China. Japan's benchmark index hit a five-year high amid growing signs of inflation.

“The simple fact is that the Dow Jones Industrial Average has gained 23 percent this year while the growth rate of the economy picked up to 4.1 percent in the fourth quarter,” Neil Mellor of BNY Mellon Global Markets said in a note. With U.S. Federal Reserve monetary policy “likely to remain accommodative well into 2015, it could be argued that these trends should continue over the course of 2014.”

He said he remains cautious about prospects for emerging markets.

In Europe, investors appeared to be switching preferences from bonds to stocks, as 10-year bond prices dipped but stock markets made solid gains. By mid-session Germany's DAX index was trading near record highs, rising 0.7 percent to 9,559.20. Britain's FTSE 100 rose 0.6 percent to 6,734.50 and France's CAC was up 1.0 percent to 4,259.48.

Friday's gains followed a strong session on Wall Street Thursday, when news that new U.S. unemployment benefit claims fell last week were taken as the latest sign the U.S. economy is gathering steam.

After a 0.8 percent gain to 16,479.88 Thursday, Dow Jones Industrial Average index futures were off 3 points ahead of Friday's session. The index has jumped 25.8 percent in 2013, and is on pace to have its best year since 1996.

Asian shares were mixed Friday following another record close on Wall Street, while the yen tumbled against the euro and the dollar.

The yen sank further in Asia as speculation of more Bank of Japan monetary easing weighed on the unit, while upbeat U.S. data supported the greenback.

Tokyo closed flat, edging up 4.50 points to 16,178.94, while Seoul gained 0.15 percent, or 2.98 points, to 2,002.28. Sydney also ended flat, slipping 0.06 percent, or 3.1 points, to 5,324.1.

Chinese shares climbed 1.36 percent, or 28.15 points, to 2,101.25, while Hong Kong gained 0.27 percent, or 63.69 points, to 23,243.24.

Late buying pushed Tokyo's Nikkei back into positive territory and a fresh six-year high, while a weaker yen also boosted the market.

The U.S. unit briefly topped the 105 yen mark earlier Friday, its highest since October 2008.

“Yen-selling pressure appears strong. It would be no surprise to see the dollar rise to 110 yen in the January-March quarter,” Yosuke Hosokawa, a dealer at Sumitomo Mitsui Trust Bank, told Dow Jones Newswires.

New data published Friday also showed that Japan's war on deflation got a boost last month as consumer inflation rose 1.2 percent — its fastest pace in five years.

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