LONDON (Reuters) – The euro pulled out of its recent dive and the dollar eased off the accelerator pedal on Thursday, as markets took a breather after a week of breakneck moves in the world’s two biggest currencies.

The pause by the dollar gave some respite to emerging markets as well as oil and commodities heavily correlated to the U.S. currency’s strength, and helped MSCI’s main world stocks index .MIWD00000PUS secure its first rise in five days.

After surging over 1.5 percent on Wednesday and now 15 percent since the start of the year, European bourses<0#.INDEXE> saw another solid start with London .FTSE, Frankfurt .GDAXI and Paris .FCHI up 0.6, 0.2 and 0.1 percent respectively.

The gargantuan market moves over the last week have been driven by the starkly diverging policies of the world’s major central banks.

The European Central Bank has just kicked off a 1 trillion euro bond buying campaign, Japan’s central bank is busily printing money, but the U.S. Federal Reserve is heading towards its first rate rise in almost a decade.

“I think we have to move (raise rates) now, or soon, in order to be in the right position as the economy continues to evolve,” James Bullard, a Fed policymaker although one who will not vote at its meetings this year, told the Financial Times.

On the surge in the dollar, he appeared relaxed, saying much of the move may now have happened. “A lot has been priced in at this point,” he said.

Early European trading saw the greenback steady, having dropped around 0.5 percent against a basket of six of the world’s main currencies.

The euro had also recovered to trade at just under $ 1.06 having fallen as far as $ 1.0494 EUR= in Asia, the lowest since Jan 2003. It has slumped 12 percent this year alone.

“The big question is whether we will see parity against the euro.” said Kerry Craig, a global markets strategist at J.P. Morgan.


The rally in euro zone bonds moved into its fourth day although at a slightly more restrained pace, with the ECB forging ahead with QE purchases and a wave of new debt sales expected to attract strong demand. [GVD/EUR]

Top ECB policymaker Benoit Coeure said the bank had bought 9.8 billion euros of bonds in the first three days of its buying programme, well above the run rate needed to hit its roughly 50 billion a month target for government bonds.

Asian markets overnight had been lifted by a surprise interest rate cut by South Korea which came hot on the heels of one from Thailand and took the total number of central banks around the world that have cut rates this year to a staggering 23.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS extended gains and was up 0.7 percent, moving away from Wednesday’s seven-week lows. MSCI’s 46-country benchmark world index climbed off one-month lows.

The dollar’s dip also helped commodities. Oil prices LCOc1CLc1 rebounded after U.S. crude skidded to a one-month low overnight after government data showed a U.S. oil inventory build last week, contrary to some expectations for a drawdown.

It last stood at $ 48.42 a barrel, up about 0.5 percent on the day. The European benchmark Brent LCOc1 added 1 percent to$ 58.18 a barrel, while gold XAU= snapped an 8-day losing streak as it steadied at $ 1,160 an ounce.

(Reporting by Marc Jones; Editing by Tom Heneghan)