Expectations that the European Central Bank and Federal Reserve will cut interest rates boosted stocks globally, while the pound sagged on worries that likely new prime minister Boris Johnson would lead Britain into a no-deal exit from the European Union.

In early European trade, the pan-region Euro Stoxx 50 futures rose 0.46 per cent, while the German DAX futures climbed 0.57 per cent and FTSE futures 0.40 per cent.

In Asia, Japan's Nikkei rose 0.95 per cent, while MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.04 per cent. The Shanghai Composite Index edged up 0.15 per cent. Australian stocks added 0.4 per cent and South Korea's KOSPI gained 0.45 per cent. 

The S&P 500 edged up towards a record high on Monday, supported by expectations that the Federal Reserve would cut interest rates at its July 30-31 policy meeting.

European stocks had also nudged higher the day before, with the European Central Bank seen cutting rates by 10 basis points at its policy meeting on Thursday. But with central bank easing no longer a fresh theme, market gains were limited.

“The likelihood of easing by the Fed is supportive for equity markets, but the probability of a 25 basis points rate cut has already been factored in for the most part,” said Soichiro Monji, senior strategist at Sumitomo Mitsui DS Asset Management.

In the currency markets, the pound was 0.2 per cent lower at $1.2449 and headed for its third session of losses.

Sterling was under pressure due to the likelihood that Britain's ruling Conservative party would elect eurosceptic Johnson as its new leader and Prime Minister, replacing Theresa May. The result of the weeks-long internal party election will be announced on Tuesday.

Some investors are worried Johnson could pull Britain out of the European Union on October 31 without a trade deal in place in order to appease hardline anti-EU members of his Conservative Party.

The dollar index against a basket of six major currencies rose 0.2 per cent to 97.463, helped by a rise in US Treasury yields. The greenback gained 0.15 per cent to 108.040 yen. The euro dipped 0.17 per cent to $1.1189, weighed by the possibility of easing by the ECB.

“It is going to take a bold stroke by the ECB to both satisfy markets clamouring for incremental easing and make a difference to the economy, all the while remaining inside its institutional setting and not destabilising the financial system,” wrote Carl Weinberg, chief international economist at High Frequency Economics.

The New Zealand dollar slipped 0.4 per cent to $0.6731, pressured in part by news the Reserve Bank of New Zealand (RBNZ) was taking a fresh look at unconventional monetary policy strategies, with interest rates already at a record low of 1.5 per cent.

Crude oil prices edged higher after two days of sharp gains due to heightened tensions in West Asia. Brent crude added 0.19 per cent to $63.38 per barrel, after rising 1.2 per cent the previous day on concerns over possible supply disruptions after Iran's seizure of a British tanker late last week.

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