GLOBAL MARKETS-Stocks rally, dollar falls as Fed reassures
* Dollar extends slide, tumbles 1.3 percent after dovish Bernanke * European shares rise, Wall Street stocks open sharply higher * U.S. Treasury prices rise By Caroline Valetkevitch NEW YORK, July 11 (Reuters) - Global stock indexes rose sharply while the dollar tumbled on Thursday after Federal Reserve chief Ben Bernanke signaled the U.S. central bank may not be as close to winding down its stimulus policy as markets had begun to expect. On Wall Street, stocks briefly jumped 1 percent at the open. Fed Chairman Bernanke said on Wednesday the overall message from the central bank was that "a highly accommodative policy is needed for the foreseeable future." "His statement that they will be highly accommodative for the foreseeable future is pretty clear and the market loved it," said Doug Cote, chief market strategist at ING U.S. Investment Management in New York. "That statement was very clear and that is what the market is reacting to, because he is in charge." Despite minutes from the Fed's June meeting showing half of its policymakers think its $85 billion-a-month stimulus program should be wound down by the end of the year, Bernanke's message was enough to snap markets back into buying mode. U.S. stimulus has kept interest rates low and supported equity markets, and there is concern in financial markets that if the Fed unwinds its support too soon, that could slow the recovery of the world's biggest economy. The Dow Jones industrial average was up 120.15 points, or 0.79 percent, at 15,411.81. The Standard & Poor's 500 Index was up 15.62 points, or 0.95 percent, at 1,668.24. The Nasdaq Composite Index was up 35.95 points, or 1.02 percent, at 3,556.71. MSCI's world index rose 1.5 percent, while the pan-European FTSEurofirst 300 climbed 0.4 percent after earlier touching 1,201.79, its highest level since early June. The dollar, which had touched three-year highs before the Fed's latest meeting minutes on Wednesday, slipped against a basket of currencies. The dollar index fell to 82.418, its lowest since June 25 and down around 2.8 percent from the three-year high of 84.753 touched just two sessions ago. It last stood at 82.974, down 1.27 percent. Large swings in currencies, stocks and bonds over recent weeks have highlighted the tricky task the Fed and other central banks face as they try and wean markets off the cheap and easy money they have provided during the global financial crisis. BUCKING THE TREND Portuguese, Spanish and Italian bonds and Lisbon's stock market bucked the wider global move higher as tensions continued to bubble on the euro zone's debt-strained southern fringe. With Portugal's coalition government teetering, President Anibal Cavaco Silva urged a cross-party deal with the main opposition socialists to try and ensure the country keeps to its bailout deal. Italy was also in the spotlight, and by proxy Spain, after Rome failed to hit the top of its pre-flagged target in a 3- and 30- year bond sale. That followed this week's rating downgrade and ongoing political difficulties. BOND PRICES HIGHER U.S. Treasuries prices extended gains briefly after data showed domestic jobless claims unexpectedly rose in the latest week, spurring bets the Fed might delay plans to reduce bond purchases. Benchmark 10-year Treasury notes last traded 23/32 higher with a yield of 2.5872 percent, down 8.7 basis points from late on Wednesday. Commodity markets gained on the view that continuing stimulus from the Fed and European and Japanese central banks would support global economic growth. Copper prices hit their highest level in nearly a month. Three-month copper on the London Metal Exchange rose to its highest since June 18 at $7,049.25 a tonne in intraday trade. Brent crude dipped after a monthly IEA oil report dampened bullish sentiment. Brent fell 39 cents to $108.12 a barrel, while U.S. crude was down $1.16 at $105.36, after peaking at $107.45 earlier.