Stocks lifted by hopes for global growth Tuesday 18:00 GMT. Mounting optimism about the prospects for the global economy helped push US and European equities higher and provided solid support for the dollar, even as Treasury bond yields continued to drift lower. A sharp narrowing of the US trade deficit in November sent economists scrambling to upgrade their forecasts for the country's fourth-quarter GDP growth. The mood was further helped by fresh signs that the eurozone was putting its sovereign debt crisis behind it as Ireland saw robust demand for its first bond issue since formally exiting its bailout programme last month. By midday in New York, the S&P 500 equity index was up 0.5 per cent and on track for its rise this year. Across the Atlantic, the FTSE Eurofirst 300 rose 0.8 per cent, with Spanish and Italian stocks up 2.9 per cent and 1.4 per cent respectively. Tokyo failed to join in the party, however, with the Nikkei 225 falling 0.6 per cent. Dublin comfortably raised €3.75bn through a sale of 10-year bonds, making a big dent in its 2014 funding requirement, and helping to drive down sovereign yields for other peripheral eurozone countries. Spain's 10-year yield fell 9 basis points to 3.82 per cent, according to Reuters data, extending a recent fall prompted by signs of improving economic conditions in the country. Portugal's 10-year yield tumbled 18bp while Greece's fell below 8 per cent for the first time in more than three years. Meanwhile, the latest eurozone inflation data kept alive the prospect of further policy accommodation from the European Central Bank. Headline consumer prices across the region rose by 0.8 per cent in the year to December, down from 0.9 per cent in November. The core inflation rate, which excludes food and energy, slowed to 0.7 per cent - the lowest since the series began and well below the ECB's target of just below 2 per cent. "The very low inflation trend means that further ECB action remains on the table," said Nick Kounis, head of macro research at ABN Amro, although he did not expect any moves at this week's meeting of the central bank. This position may well change in February or March because of the serious undershooting of its inflation target. The ECB cut its refi rate in November precisely because of such concerns. However, since then financial conditions have arguably tightened. Jane Foley, senior currency strategist at Rabobank, noted that the ECB's rate cut had had only a temporary impact on the euro. It has been the case for some time now that the market does not view the ECB as having a strong hand in terms of fresh policy tools. Since interest rates are already so low, another cut from the ECB may have little direct impact on the market Jane Foley, senior currency strategist at Rabobank "It has been the case for some time now that the market does not view the ECB as having a strong hand in terms of fresh policy tools," she said. Since interest rates are already so low, another cut from the ECB may have little direct impact on the market. Indeed, the euro was down less than 0.1 per cent against the dollar at $1.3636. The US currency was 0.2 per cent higher against the yen at Y104.44, and the dollar index, a gauge of its value against a weighted basket of counterparts, was up 0.1 per cent at 80.76. Support for the dollar came from data showing that the US trade deficit shrank to a four-year low of $34.3bn in November, prompting some economists to upgrade their expectations for fourth-quarter GDP growth. "We have raised our fourth-quarter 2013 real GDP forecast for the US to 3 per cent from 1.5 per cent in response to recent stronger-than-expected data on trade and consumer spending," said Dean Maki at Barclays. The strength of fourth-quarter growth raises the question of whether 2014 real GDP growth might be notably stronger than our 2.5 per cent forecast. But the rosy picture of the US economy painted by recent data releases - which many think could strengthen the Federal Reserve's resolve to continue scaling down its stimulus measures - did not appear to have dented demand for US government bonds. The yield on the 10-year Treasury, which moves inversely to its price, was down another 2bp to 2.94 per cent. The Bund yield also fell 2bp to 1.89 per cent in spite of encouraging data on German unemployment and retail sales. The dollar's firmer tone and the rebound in world equities helped call a halt to gold's 2014 rally, with the metal falling $7 to $1,229 an ounce. Industrial commodities were firmer, however, with copper rebounding from a two-week low hit on Monday, and Brent crude rallying 61 cents to $107.34 a barrel.