LONDON—World stock markets got their foot back on the gas on Thursday as hopes grew that Washington could resolve its debt-ceiling squabbles and a global drop in energy prices tempered deepening fears of “stagflation”. Europe’s bourses rallied off 2–1/2-month lows as easing oil and gas prices offered relief after a shock 4 percent drop in German industrial production, which highlighted the toxic “stagflation” risk of runaway inflation and moribund growth. The pan-European STOXX 600 index rose 1.1 percent in broad-based buying to reverse weekly losses, with miners, utilities and carmakers all driving higher. Bond market borrowing costs also calmed after a sharp spike a day earlier that had taken the region’s benchmark government yields to their highest point since June. “We believe the recent pullback (in world stocks) is an opportunity to buy the dip in cyclical assets—which would include all equities (EM and DM),” analysts at JPMorgan said, although …
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