(Refiles to change Wrapup number to 7 from 9)
* BOJ unexpectedly adopts negative rates in big stimulus
step
* U.S. shares rise but S&P on track for worst January in 46
years
* Yen falls broadly, 10-year JGB yield plumbs record low
* BOJ, supply deal talk give oil another session of gains
By Jemima Kelly
LONDON, Jan 29 (Reuters) - World stock markets rallied and
the yen slumped on Friday after the Bank of Japan took one of
its main interest rates into negative territory, its boldest
step yet to re-inflate the world's third-biggest economy.
Oil prices added to this week's gains on prospects of a deal
among major producers in an effort to pare the supply glut that
had pushed crude to 12-year lows.
Bond yields fell broadly, led by Japanese benchmark
government bonds whose yields plunged to record lows
JP10YTN=JBTC . The Bank of Japan said it would charge 0.1
percent for excess reserves and may cut rates further if
necessary, an aggressive policy pioneered by the European
Central Bank
Most investors had believed Japan's policymakers were too
cautious to ever adopt such a radical measure. The dollar surged
in response, rising about three yen to an almost six-week high
of 121.495 JPY= . By 1230 GMT it was up 1.8 percent at 120.97.
"We're only one month into the year and two of the major
central banks have already surprised markets," said J.P. Morgan
Asset Management's fixed income CIO in London, Nick Gartside.
"The ECB has signaled more policy action in March and the BOJ
has moved to negative interest rates, a policy previously
thought of as unthinkable."
The Dow Jones industrial average .DJI rose 187.85 points,
or 1.17 percent, to 16,257.49, the S&P 500 .SPX gained 19.82
points, or 1.05 percent, to 1,913.18 and the Nasdaq Composite
.IXIC added 49.32 points, or 1.09 percent, to 4,556.00.
Despite Friday's gains, the S&P was poised for its worst
January in 46 years.
European shares tracked Asian stock markets higher, with the
pan-European FTSEurofirst 300 .FTEU3 index up 1.5 percent.
The MSCI world equity index .MIWD00000PUS , which tracks
shares in 45 countries, rose 0.8 percent. For the month, though,
the index is down 7.2 percent - its steepest fall in almost four
years.
In the currency market, the dollar was up 1.1 percent
against a basket of currencies at 99.604 .DXY .
The yen tumbled 2.3 percent against the greenback at 121.56
yen JPY= . It shed 1.4 percent against the euro at 131.77 yen
EURJPY= .
The promise of extra global stimulus boosted oil prices,
which had already risen for three sessions on talk of a possible
deal to curb excess supply.
Brent crude LCOc1 in London was last up $1.00, or 2.95
percent, at $34.89 a barrel, and U.S. crude futures CLc1 were
last up $1.05, or 3.16 percent, at $34.27 per barrel.