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World shares climb, dollar falls on relief over Fed's flexible stance

World shares climb, dollar falls on relief over Fed's flexible stance

FILE PHOTO: A Wall Street sign is pictured outside the New York Stock Exchange in New York, October 28, 2013. REUTERS/Carlo Allegri/File Photo

NEW YORK : World shares rose on Thursday and the U.S. dollar edged lower, a day after minutes from the U.S. Federal Reserve's May meeting indicated the central bank would remain flexible and might pause rate hikes later in the year.

Wall Street closed higher with the three main U.S. indices positioned for their biggest weekly gains since mid-March.

The MSCI's benchmark for global stocks was up 1.54 per cent at 4:25 p.m. EDT (2025 GMT). Europe's pan-regional STOXX 600 equity benchmark index rose 0.78 per cent, while the MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.02 per cent.

The Dow Jones Industrial Average .DJI rose 516.91 points, or 1.61 per cent, to 32,637.19; the S&P 500 .SPX gained 79.11 points, or 1.99 per cent, to 4,057.84; and the Nasdaq Composite .IXIC added 305.91 points, or 2.68 per cent, to 11,740.65.

The three indexes were on track to snap their longest streak in decades of weekly declines.

The minutes of the Fed's May meeting, released on Wednesday, showed a majority of Fed officials supported the well-telegraphed rate hikes of 50 basis points each in June and July.

Analysts at Bank of America said the Fed could pause its tightening in September if the economy deteriorates.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits fell more than expected last week as the labor market remained tight. A separate report confirmed the U.S. economy contracted in the first quarter.

"Jobs data is really going to drive the outlook of the Fed going forward," said Brian Overby, a senior options analyst at Ally. "If they do see the unemployment rate increase a little bit that could slow them down."

The U.S. dollar fell 0.284 per cent against a basket of global currencies. If the Fed gets less aggressive on tightening, that would weaken the greenback's safe-haven appeal.

The euro was up 0.44 per cent to $1.0727.

U.S. Treasury yields edged up after the benchmark 10-year note hit a six-week low, with signs of slower economic growth reducing inflation fears.

The yield on 10-year Treasury notes rose 2.7416 per cent after falling to 2.706 per cent early in the session.

"The 10-year treasury was almost at 3 per cent and has pulled back,” said Clark Kendall, president and CEO of Kendall Capital. "That is an indication that the market feels like the Fed is addressing the inflation problem."

In commodities, Brent futures rose $3.37, or 3.0 per cent, to settle at $117.40 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $3.76, or 3.4 per cent, to settle at $114.09.

U.S. gold futures was last up 0.17 per cent to $1,849.50.

In Asia, Chinese blue chips reversed earlier losses to rise 0.25 per cent after struggling to find direction for most of the session, as investors fretted over signs of a slowdown but took comfort in comments from Premier Li Keqiang on stabilizing the ailing economy.

South Korea's central bank raised interest rates for a second consecutive meeting as it grapples with consumer inflation at 13-year highs.

Source: Reuters

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