LONDON - Global shares surged and a manic bond selloff stabilized on Thursday after US President Donald Trump said he would temporarily lower the hefty duties he had just imposed on dozens of countries.

Following a days-long market rout that erased trillions of dollars from global stocks and jolted US Treasury bonds and the dollar, Trump on Wednesday announced a 90-day pause on many of his new reciprocal tariffs in a shock reversal.

"You've had a relief rally after the realization that market pressure is something that resonates with the US president," said George Lagarias, chief economist at Forvis Mazars.

"The key takeaway here is that there are limits and thresholds that he (Trump) will likely respect," Lagarias added.

Trump's reversal pushed equities higher across the globe, starting with a 9.5 percent rally in the S&P 500 on Wednesday.

European shares are following suit on Thursday. The pan-continental STOXX 600 is up 5.3 percent, on track for its biggest one-day gain since March 2020.

Major indexes in London, Paris and Frankfurt are up between 4.1 percent and 5.6 percent.

In Asia, Japan's Nikkei advanced more than 8 percent, while a broader gauge of Asia-Pacific stocks excluding Japan rose 4.4 percent.

But Wall Street futures took a breather after the towering rally, as investors struggled to come to terms with the US administration's economic policies.

"The world, political and financial is looking on with horror, not bemusement, at an administration that prioritizes the signing of an executive order for more water-power in shower heads, on the same day that the bond market breaks and investors question the long-term credibility of the administration having flip-flopped on the largest of their policies, tariffs," said Martin Whetton, head of financial markets strategy at Westpac.

Nasdaq futures fell 2 percent and S&P 500 futures were off 1.7 percent.

Both indexes had clocked their biggest daily percentage gains in more than a decade during Wednesday's cash session.

The dollar weakened around 0.9 percent against both the yen and the Swiss franc, failing to sustain its jump against the two safe-haven currencies in the previous session.

"I think the initial move was just massive short cover, and this has given the world a bit of a breathing space, except for China... because markets were starting to price in the worst-case scenario," said Khoon Goh, head of Asia research at ANZ.

Trump's reversal on the country-specific tariffs is not absolute. A 10 percent blanket duty on almost all US imports will remain in effect, the White House said. The announcement also does not appear to affect duties on autos, steel and aluminium that are already in place.

He also heaped pressure on China, saying he would raise the tariff on Chinese imports to 125 percent from the 104 percent level that came into effect on Wednesday.

China on Wednesday raised additional duties on American products to 84 percent and imposed restrictions on 18 US companies.

Yet investors for now seemed to view the latest escalation of Sino-US trade tensions with a narrow lens, choosing merely to focus on the 90-day window Trump has granted to dozens of countries.

"I guess at least the relief is now global trade won't grind to a complete halt," said Wong Kok Hoong, head of equity sales trading at Maybank.

"The China + 1 supply chain route (is) still intact. As the rest of the world will be at workable 10 percent tariffs for 90 days, companies/businesses have time/alternatives to adjust supply chain routes."

Bonds selloff

A steep selloff in US bonds this week also showed some signs of easing on Thursday.

The benchmark 10-year Treasury yield dropped 10 basis points (bps) to 4.2985 percent, having touched a high of 4.5150 percent in the previous session.

A violent US Treasury selloff in the previous sessions, evoking the COVID-era "dash for cash", had reignited fears of fragility in the world's biggest bond market.

"It makes sense to apply some uncertainty discount on US risk assets," said Forvis Mazars's Lagarias.

German Bunds, which had acted as the lone safe haven in the bond markets, sold off on Thursday. The 10-year yield was up 8 bps at 2.659 percent while the two-year rose 14 bps to 1.855 percent.

Elsewhere, oil prices fell as investors fretted about the continued growth shock from the worsening Sino-US trade war. Brent crude futures were down 2.3 percent at $63.97 per barrel, while US crude fell 2.2 percent to $60.95.

Spot gold extended its climb and was last up 0.9 percent at $3,109 an ounce.