Global shares rally on Yellen hopes, sagging growth hits euro

Thu Nov 14, 2013 7:37am EST
 
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By Richard Hubbard

LONDON (Reuters) - Confirmation by incoming Federal Reserve chief Janet Yellen that the U.S. central bank's loose monetary policy was here to stay lifted world stocks on Thursday while weak euro zone data gave the dollar a boost.

In remarks prepared for her nomination hearing before a U.S. Senate Banking Committee later in the day, Yellen said high unemployment, weak inflation and an economy running below potential meant the Fed had "more work to do".

Her comments sent the Dow and the S&P 500 .DJI .SPX to record highs on Wednesday with stock futures for both indexes pointing to further gains when Wall St opens. .N

"The markets are happy with Yellen's comments," said Michael Leister, senior rates strategist at Commerzbank. "Central bank liquidity is there, growth is low but inflation is also low, which is a pretty decent environment."

World markets have been buffeted since May when the Fed first suggested that it could begin scaling back the $85 billion a month it is spending on bonds to support growth.

Since then, a run of mixed U.S. data has had investors constantly second-guessing the central bank's intentions. Yellen's remarks, which seemed to push any policy change well into next year, have ended that uncertainty for now.

Investors will still be closely watching her defense of the policy stance at the Senate hearing, scheduled to start at 10 a.m. (1500 GMT), although she is expected to stick to the prepared remarks.

The statement was enough for Asian investors to push MSCI's broadest index of Asia-Pacific shares outside Japan up by 0.75 percent .MIAPJ0000PUS, as it bounced off a six-week low. The MSCI world index .MIWD00000PUS jumped 0.35 percent.   Continued...

 
A visitor walks past logos at the Tokyo Stock Exchange in Tokyo June 13, 2013. REUTERS/Toru Hanai