World stocks marched back towards record highs on Thursday as surging inflation saw Britain and Norway hike interest rates and the ECB trim its super-sized bond buying programme a day after the U.S. Federal Reserve had accelerated its withdrawal. It was a jam-packed day. Turkey"s lira took another bashing as its own central bank ploughed on with rate cuts. read more Omicron numbers were rocketing globally too, but for once this was not infecting the markets. The pan-European STOXX 600 index (.STOXX) jumped 1.5%, led by tech (.SX8P), energy (.SXEP) stocks. Record high Wall Street was also set to rise again , while sterling and UK bank shares bother shot up after the BOE ended months of flirting with the idea and became the first G7 central back to hike rates, albeit by only 0.15 percentage points to 0.25%. read more Hussain Mehdi, Macro and Investment Strategist, HSBC Asset Management, said the 8-1 vote by BOE policymakers to raise rates was "fairly surprising" given the current surge in Omicron cases although there were solid reasons to do so. "The labour market is tight, and Omicron has the potential to exacerbate supply-side constraints in goods and labour," Mehdi said. "Ongoing upside inflation risks are likely to push the MPC (BOE) into further action in 2022." The Fed had laid out a scenario in which the pandemic, despite the Omicron surge, gives way to a benign set of economic conditions, with inflation easing largely on its own, interest rates increasing slowly, and unemployment staying low. "The economy no longer needs increasing amounts of policy support," Fed Chair Jerome Powell had said. "If the Fed moves (hikes interest rates next year), it will be okay as long as there is growth," said Barrow Hanley"s Head of International Equities Rand Wrighton, referring to bets U.S. rates could go up three times before the end of 2022. Attention then turned to the ECB in Frankfurt which is also trying to balance support of a virus-threaten economy with the need to cut money printing to cool price rises. It said it would cut its bond purchases under its 1.85 trillion euro Pandemic Emergency Purchase Programme (PEPP) next quarter and wind down the scheme by March in a long-flagged move. It will, however, keeping reinvesting PEPP profits until the end of 2024 and ramp up the longer-running but more rigid Asset Purchase Programme (APP) to limit the withdrawal effects. "On balance, the new approach to quantitative easing (QE) is slightly dovish," Gurpreet Gill, Macro Strategist, Global Fixed Income, at Goldman Sachs Asset Management, said. Value of world stocks market has nearly doubled since COVID lows of 2020 Value of world stocks market has nearly doubled since COVID lows of 2020 TURBULENT TURKEY Earlier Norway"s central bank had also raised its main interest rate for the second time in three months and said more were likely, whereas the Swiss National Bank kept its rates locked at -0.75%. read more Sterling raced past $1.33 after the BOE"s hike move having peaked for the year back in May at $1.4250. Shares in Britain"s big banks like Barclays and Lloyds jumped 5% on the presumption that they will now be able to push up lending rates. The euro was soft peddling at just below $1.13 after forward-looking euro zone purchasing manager data had come in weaker than expected earlier. read more Europe is facing a fourth wave of infections and many governments have been encouraging citizens to stay home and avoid unnecessary social contact. IHS Markit"s Flash Composite Purchasing Managers" Index, a good indicator of overall economic health, dropped to 53.4 in December from 55.4 in November, its lowest since March and below the 54.0 predicted in a Reuters poll. That headline number was dragged down by the services PMI, which sank to an eight-month low of 53.3 from 55.9. While above the 50-mark separating growth from contraction it missed the Reuters poll estimate for 54.1. "The euro zone economy is being dealt yet another blow from COVID-19, with rising infection levels dampening growth in the service sector in particular to result in a disappointing end to 2021," said Chris Williamson, chief business economist at IHS Markit. It wasn"t looking like a good Christmas for Turkey either. The lira dropped nearly 4% to an all-time low beyond 15 against the dollar after another 100 basis point interest rate cut by the central bank, which has fallen in line with President Tayyip Erdogan"s risky new economic programme. read more "We exited local markets in September - we went to zero," said Aegon Asset Management"s head of emerging market debt Jeffery Grills, blaming the direction the country"s economic and monetary policies were now taking. The lira has halved in value this year, and worries are mounting about what could happen if low rates and stimulus ahead of presidential elections in 2023 continue to ramp up inflation which is already above 20%. "The accompanying statement suggests that the easing cycle will be on pause early next year but, even so, the lira will remain under pressure and capital controls are likely," said Jason Tuvey at Capital Economics. Things were far smoother in the commodity markets. Oil rose to $75 supported by record U.S. implied demand and falling crude stockpiles , while cooper which is highly sensitive to the health of the global economy rebounded 2.2% after falls on Wednesday has taken its losses since October past 11%. Lira volatility gauges sound crisis warning sound Lira volatility gauges sound crisis warning sound (This story correct BOE rate hike size to 0.15 percentage points from 0.1 in paragraph 4) Reporting by Marc Jones; additional reporting by Kevin Buckland in Tokyo; editing by Raissa Kasolowsky and Philippa Fletcher Our Standards: The Thomson Reuters Trust Principles.