World shares gain steam in bright 2022 opening

World shares extended on Tuesday a bright start to 2022 as markets from Europe to Asia shrugged off worries the Omicron coronavirus variant could choke the global economic recovery, while the dollar rose after US bond yields jumped.

The Euro STOXX 600 gained as much as 0.9 per cent to hit a record of 494.55 points, topping its previous all-time high scaled a day earlier. Indexes in Germany, France and Britain rose between 0.7 per cent and 1.3 per cent.

Travel and leisure stocks jumped over 3 per cent, with Ryanair adding 10 per cent and British Airways-owner IAG gaining over 12 per cent, reflecting expectations that Omicron's impact on the industry would be less severe than initially feared.

"As far as markets are concerned Omicron is in the rear view mirror," said Colin Asher, senior economist at Mizuho.

"The main focus was on a collapse in demand and now because demand has recovered so quickly, the focus is more on the supply... it will prolong supply chain delays and push prices higher rather than push activity down."

Wall Street was also set for gains after closing a day earlier at record highs, with e-mini futures for the S&P 500 index 0.4 per cent higher.

The US dollar rose to its highest since 2017 against the Japanese yen after US Treasury yields jumped on Monday as traders bet on an early Federal Reserve interest rate hike to tame fast-rising inflation.

Euro zone bond yields held steady near their highest levels in around two months.

In a sign that economies may weather the spread of Omicron, factory activity in Asia and Europe grew in December, suggesting the direct hit from the variant on output appeared
subdued.

Asian stocks were on the front foot following Wall Street's record highs on its first trading day of 2022, with MSCI's gauge of Asia Pacific stocks outside Japan up 0.5 per cent.

Analysts said the gains for stocks reflected in part optimism over prospects for the US economy.

"We are firmly of the view the US is seeing boom conditions and a very tight labour market which will boost household incomes," said John Milroy, an Ord Minnett advisor in Sydney.

Major Wall Street indexes closed at record highs on Monday, with Apple Inc becoming the first company to reach a $3 trillion market value.

The tech giant's market capitalisation is now well above the combined value of the blue chips listed on London's FTSE 100.

The S&P index surged nearly 28 per cent last year, driving MSCI's 50-country index of world stocks to its third consecutive year of double-digit gains.

The index was up 0.3 per cent on the day.