NEW YORK (Reuters) - Stocks around the world extended recent gains and oil prices jumped on Wednesday on optimism the United States and China may be inching toward a trade deal, soothing fears of an all-out trade war and its possible impact on global growth.
Heightened risk appetite boosted U.S. Treasury yields to the highest this year, while the U.S. dollar extended losses after minutes from a Dec. 18-19 Federal Reserve policy meeting showed many Fed policymakers said the central bank could be patient on future rate hikes.
Delegations from China and the U.S. ended talks in Beijing on Wednesday amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased access to China’s markets.
China has pledged to purchase “a substantial amount” of agricultural, energy and manufactured goods and services from the United States, the U.S. Trade Representative’s office said on Wednesday.
MSCI’s all-country index .MIWD00000PUS climbed 1.03 percent for a fourth day of gains.
That added to advances since last week in equity markets around the world, following a strong U.S. employment report and comments from the Federal Reserve chief that calmed worries U.S. interest rate hikes would hurt growth.
A range of Fed policymakers said last month they could be patient about future interest rate increases and a few did not support the central bank’s rate increase that month, minutes from their Dec. 18-19 policy meeting showed.
On Wednesday, a clutch of Fed officials said they would be cautious about any further increases in interest rates so the central bank could assess growing risks to an otherwise-solid U.S. economic outlook.
The U.S. stock market was supported by advances by technology and other trade-sensitive sectors. The benchmark S&P 500 .SPX index is up by about 10 percent from 20-month lows hit around Christmas.
“If you want to gauge how investors are viewing the trade talks, just watch tech, and semiconductors in particular,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.
The Dow Jones Industrial Average .DJI rose 91.67 points, or 0.39 percent, to close at 23,879.12, the S&P 500 .SPX gained 10.55 points, or 0.41 percent, to end at 2,584.96 and the Nasdaq Composite .IXIC added 60.08 points, or 0.87 percent, to finish at 6,957.08.
The pan-European STOXX 600 benchmark closed up 0.53 percent, its highest close in nearly four weeks.
Oil prices jumped, helped by the hopes of easing trade tensions between China and the U.S., while OPEC-led crude output cuts also provided support.
Brent crude LCOc1 futures rose $2.72 to settle at $61.44 a barrel, a 4.6 percent gain. U.S. West Texas Intermediate (WTI) crude CLc1 futures rose $2.58 to settle at $52.36 a barrel, a 5.2 percent gain.
The dollar tumbled to its lowest level since October after the Fed expressed caution about future rate hikes, and as investors reduced safe-haven bets due to optimism about U.S.-China trade talks.
“It will probably be mid-year before the Fed excites hike prospects again,” said Joseph Trevisani, senior analyst at FXStreet.com in New York.
U.S. Treasury yields climbed to the highest this year, helped by improved risk appetite, but retreated following dovish commentary from Fed speakers and a strong 10-year note auction.
Benchmark 10-year notes US10YT=RR were last down 2/32 in price to yield 2.7225 percent after earlier rising to 2.747 percent, the highest since Dec. 28.
Gold prices rose on Wednesday, with spot gold XAU= up 0.68 percent to $1,293.65 per ounce.
Reporting by Saqib Iqbal Ahmed; Additional reporting by Sruthi Shankar in Bengaluru and Gertrude Chavez-Dreyfuss in New York; Editing by Chizu Nomiyama and Chris Reese