Stocks in Tokyo surged in anticipation of a new coalition government being formed. Photo: AP PHOTO

World stock markets have risen as traders placed bets on Japanese stimulus and cheered data suggesting China's economy is withstanding a US trade war.

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Japan's Nikkei jumped 2.8 per cent to a record peak on news the Liberal Democratic Party and the Japan Innovation Party have agreed to form a coalition government, setting the stage for Sanae Takaichi, who is viewed as pro-stimulus, to become prime minister.

Europe's Stoxx 600 share index bounced 0.7 per cent higher in early trade on Mo

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