European shares rose and bond yields fell on Tuesday on hopes that a snap election and delayed tax increase in Japan might lead to more economic stimulus measures, which also knocked the yen to its lowest since 2007, Reuters reported. Investors were also cheered by a better-than-expected reading of German investor and analyst sentiment, which pointed to a more positive outlook for Europe's No. 1 economy. Japanese Prime Minister Shinzo Abe's call for parliament to be dissolved on Friday was widely expected and is seen potentially bringing more measures to stimulate growth after the Japanese economy unexpectedly slipped into recession. Abe also said an unpopular sales tax rise would be delayed. The yen fell to a seven-year low against the dollar after Abe's comments, extending recent losses in the wake of fresh stimulus measures announced by Japan's central bank at the end of October. It slid to a six-year trough against the euro. The pan-European FTSEurofirst 300 extended early gains and was up 0.6 percent at 1,359.62 points at 1101 GMT. Japan's Nikkei index had risen 2.2 percent after press reports said Abe would call snap elections and delay the tax increase. The euro rose to $1.253 and core euro zone bond yields retreated after the survey, which added to positive sentiment following comments from European Central Bank chief Mario Draghi on Monday that he was ready to do more to fight deflation.
