The outcome of the EU referendum will determine the future of Britain as well as the European Union.
Sterling climbed to a 2016 high and global stocks rallied as investors bet Britons were likely to vote to remain in the European Union.
Oil prices rose, shrugging off a smaller-than-expected draw in US crude stockpiles, and the safe-haven yen fell against the dollar as the last pre-vote opinion polls showed the "Remain" camp holding a small lead.
Financial markets have been racked for months by worries about what Brexit, or a British exit from the European Union, would mean for Europe's stability. "The markets are the best judge of what is going to happen, and they are saying that Britain will remain. The key is the strong jump in the pound," said Peter Cardillo, chief market economist at First Standard Financial in New York.
The pound, which has been the lightning rod for opinion on the EU referendum throughout the six-month campaign, was up 0.9 percent at $1.48 as traders cut their bets on volatility after the vote. Wall Street rose nearly 1 percent, with the S&P 500 approaching all-time highs. MSCI's 46-country All World index climbed 1 percent to hit its highest in two weeks.
The advance on Wall Street tracked European and Asian markets. London's FTSE rose 1.23 percent, hitting a two-month high. Germany's DAX and France's CAC 40 rose nearly 2 percent. In Tokyo, the Nikkei closed up 1.1 percent.
With the polls still tight and having proved unreliable in Britain's general election last year, however, caution remained. "Everybody is a bit shell-shocked at the way the market has moved so aggressively (towards Britain remaining in the EU)," said Saxo Bank's head of FX strategy John Hardy.
"If you are stuck with a short position, you are being forced out without even knowing the result, but what this also means is that a Brexit result is now a catastrophic risk." (Latest Reuters news on the referendum, including full multimedia coverage: )
NOT SO VOLATILE TIMES
Before the British vote, exchanges, market regulators and banks moved to tighten risk-management systems. Singapore's stock exchange has raised the amount of cash companies must pledge to cover trading positions. Central banks have said they stand ready to pump in emergency cash.
Questions remained about the direction markets will take even if the United Kingdom votes to stay in the EU, with some believing investors may take profits whatever the outcome. "My guess is, the rally we've seen this week is probably 'buy on the rumor' and that if they do vote to remain I wouldn't expect to see much more in the way of upside," said Ed Keon, managing director and portfolio manager for QMA.
Safe-haven government bond prices edged lower, pushing up yields. Ten-year German bonds yielded 0.095 percent and US Treasury yields rose to 1.735 percent . The bullish tilt was reflected elsewhere. The main US stock market "fear-gauge", the VIX volatility index, dropped the most in 5 months. Safe-haven gold fell 0.4 percent to $1,261.21 an ounce before hitting a two-week low.
Demand also faded for another safe haven, the yen. The dollar jumped more than a full yen to 105.82 yen and the euro gained more than 2 percent to 120.18 yen in its biggest jump since December. The euro zone currency also climbed against the dollar, briefly breaking $1.14 and last trading up 0.5 percent to $1.135. That pushed the dollar index, which tracks the US currency against six rival currencies, down 0.2 percent..Oil prices rose in volatile trade, with investors less worried about prospects for the global economy. Brent crude was up 35 cents, or 0.8 percent, at $50.23 a barrel.
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