LONDON (Reuters) – Soothing sounds from the Federal Reserve propelled world stocks to their best January on record on Thursday although, having scored stellar gains this time last year only to flop spectacularly, traders were trying not to get too carried away. Crucially, it also said that the rundown of its balance sheet – or the stockpile of bonds it has accumulated over the past 10 years of quantitative easing – could slow too. That ticked all the boxes for financial markets. Wall Street and Asia both rallied and Europe ran up as much as 1 percent] until news that Italy was back in recession and other poor data took the wind out of the sails of most markets bar London. Futures pointed to the U.S. S&P 500 and Nasdaq both rising later though [.N]. That likely move added with Asia’s gains lifted the $4 trillion MSCI world index, which tracks 47 countries, for the 20th day out of the last 23. For January it is up more than 7 percent, which is its best January since the index began in 1990 and the best performance in any month since December 2015. “The rally really does lift all boats,” said Pictet emerging market portfolio manager Guido Chamorro. The gains for stocks were matched in bond markets. Benchmark U.S. Treasury yields, which tend to set the bar for global borrowing costs, had dived significantly and Europe’s big move saw Italian 2-year yields hit their lowest since May. But it was all pain for the dollar. It was struggling near a three-week trough against its major peers and emerging market currencies rose almost in unison having been crushed by the greenback last year. “Risk assets are dancing in the streets and the dollar’s down in the dumps,” Societe Generale strategist Kit Juckes said. “We may yet get a (Fed) rate hike in June, but if what matters is where policy’s heading in the medium term, the FX market would overlook that and sell the dollar anyway.” U.S. stocks were also set for another packed day of data and earnings. Jobless claims figures had already come out showing a 1-1/2 year high, Electric carmaker Tesla missed forecasts again but General Electric surged, marked up almost 10 percent after it beat estimates.