NEW YORK (Reuters) – Global stock markets rallied and China’s yuan posted its biggest gain since December on Monday as investors bet that the Chinese economy would boost global growth even as surging coronavirus cases delayed business re-openings across the United States.

Data showing unexpected growth in the U.S. services sector last month, almost returning to its pre-pandemic levels, also helped drive Wall Street higher and lift Brent crude futures, the global benchmark for oil.

The yuan led commodity currencies higher against the dollar as investors lapped up risky assets on growing expectations of a strong economic rebound in China, where an index of blue-chip Chinese shares soared to its highest level in five years.

A Chinese economic revival bodes well for Australia and Europe, which count Beijing as their biggest trading partner.

The euro was up 0.56% at $1.1311 and European shares jumped. The broad FTSEurofirst 300 index added 1.53% as stocks exposed to China – carmakers, industrials, energy firms and luxury goods makers – rose strongly. Banks also rallied. [.EU]

Stephen Gallo, European head of FX strategy at BMO Financial Group, said the rally in Chinese stocks was the big catalyst, adding: “The only caveat is that China’s economy is not driven purely by free-market forces. But if regulators in China are engineering a stronger equity market, it can still feed through to the rest of the world.”

China’s offshore yuan was on track for its best day against the dollar since Dec. 12, up 0.76 at 7.0148.

Chinese blue chips jumped 5.7% on top of a 7% gain last week to their highest in five years. Even Japan’s Nikkei, which has lagged due to a soft domestic economy, rose 1.8%.

MSCI’s All-Country World Index, a gauge of equity performance in 49 countries, rose 1.6%. Emerging markets rose 2.45%, their biggest single-day gain in three months.

On Wall Street, the Dow Jones Industrial Average rose 350.43 points, or 1.36%, to 26,177.79. The S&P 500 gained 39.94 points, or 1.28%, to 3,169.95 and the Nasdaq Composite added 193.99 points, or 1.9%, to 10,401.62.

A slew of upbeat U.S. data, including a record rise in June payrolls last week, has powered the Nasdaq to fresh all-time highs and lifted stock markets around the world on recovery hopes.

But a resurgence of coronavirus cases in the United States has clouded the future. In the first five days of July, 16 states reported record increases in new cases of COVID-19, the disease caused by the virus that has infected nearly 3 million Americans and killed more than 130,000, according to a Reuters tally.

U.S. Treasury yields were higher on Monday as investors priced in auctions this week that will increase the supply of the low-risk debt.

The benchmark 10-year yield was up 1.8 basis points to yield 0.6907%. German 10-year yields traded at -0.469%.

Oil rose slightly on the U.S. service sector data, while a spike in coronavirus cases that could curb fuel demand in the United States limited gains.

Brent crude settled up 30 cents at $43.10 a barrel, while U.S. West Texas Intermediate crude fell 2 cents to settle at $40.63.

Gold edged toward an almost eight-year high hit last week as the spike in coronavirus cases kept safety demand elevated, though the rally in equities and the strong U.S. services sector data limited the metal’s advance.

U.S. gold futures settled up 0.2% at $1,793.50 per ounce.

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