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 Stock markets sprinted to their highest in over a year and a half and borrowing costs and the dollar tumbled on Thursday, as traders bet that Europe's top central banks would join the U.S. Fed later in signalling interest rate cuts for next year.

Switzerland's central bank was already out the blocks pointing to subdued global growth and it was a fast start for Europe's STOXX 600 which leapt 1.6% to its highest in almost 2 years ahead of Bank of England and European Central Bank decisions later.

MSCI's 47-country world stocks index was adding to its stellar 13% gain over the last 1-1/2 months, while bond market borrowing costs were in a tailspin, with German bund and U.S. Treasury yields at nine- and four-month lows respectively. [GVD/EUR]

It was the reaction to the Fed on Wednesday where Jerome Powell had said its historic tightening of monetary policy was likely to be over with inflation now falling faster than expected.

A near-unanimous 17 of its 19 policymakers had projected the Fed funds rates would be lower in a year's time - with the median forecast showing a three-quarters of a percentage point drop from the current 5.25%-5.50% range.

That provided a surprise and left markets betting that cuts could start as soon as March and might end up being double the amount as the Fed's ratesetters currently expect.

"The big question for today is how much central banks hunt in packs," State Street Global Markets' head of macro strategy Michael Metcalfe said, referring to the upcoming BOE and ECB rate decisions.

"The assumption is, that if the Fed didn't push back no one will and everyone will pivot together".

"Interest rate markets have moved a lot... and given what the Fed has said markets will see that as a vindication of those moves."

The central banks weren't the only things Europe's traders were watching, however.

Hungarian Prime Minister Viktor Orban was digging his heels in at a high-stakes summit in Brussels, saying that Ukraine did not fulfil the criteria to start accession talks with the EU.

Orban is blocking both the start of EU membership talks and 50 billion euros ($54 billion) in financial aid for Kyiv.

The summit comes at a crucial time in Ukraine's war against Russia's invasion after a counter-offensive failed to make major gains and with the Biden administration in the United States so far unable to get a $60 billion aid package through Congress.

"There is no reason to negotiate membership of Ukraine now," Orban said as he arrived at the Brussels summit. "Pre-conditions were not met. We have to come back to it later on," he said, pointing at European Parliament elections next June.

DOLLAR DOWN

In Asia overnight, the focus had all been on the Fed's signals which had also prompted a sharp rally on Wall Street.

MSCI's broadest index of Asia-Pacific shares outside Japan shot up 1.8%, its biggest one-day percentage jump in a month although China had stumbled again and a stronger yen pushed Toyko down 0.7%. [.T][.SS]

The Fed's pivot "is a definitely a good surprise for assets," Close Brothers Asset Management's Chief Investment Officer Robert Alster said, describing it as "unadulterated good news and an early Christmas present for all", albeit one that heaps pressure on the BOE and ECB later.U.S. stock futures were pointing to a more modest 0.2% rise for the S&P 500 later, as the 10-year Treasury yield pushed as low as 3.9845%, breaking below the psychological 4% mark.

The U.S. dollar index, which measures the greenback against a basket of currencies, fell a further 0.3% to 102.53, leaving it at $1.09 to the euro and down nearly 1% versus the yen at 141.82 yen.

Spot gold was up 0.23% at $2,030.99 per ounce, after rising 2.4% on Wednesday. Oil extended its gains too with Brent up $1, or 1.3%, to $75.26 a barrel and U.S. West Texas Intermediate (WTI) up 80 cents, or 1.1%, to $70.27. [O/R]