* Wall St above record closing high
* Russian ruble hits 5-year low vs dollar
* Euro bounces off 2-week low
* U.S. Treasuries' yields at two-week low
* Yuan rebounds but still below PBOC fixing
By Chuck Mikolajczak
NEW YORK, Feb 27 Stocks on world markets
advanced on Thursday, reversing early declines as comments from
U.S. Federal Reserve Chair Janet Yellen offset concerns over
tension in Ukraine and Russia.
Yellen signaled the central bank was likely to stay the
course in its current plan to scale back its stimulus measures
and said the Fed would be on alert to make sure recent signs of
weakness in the U.S. economy are due to cold weather and storms,
not signals of a more fundamental slowdown.
"Markets are showing some relief that monetary policy may
remain loose and that the Fed is clearly taking a pragmatic view
quarter by quarter," said Lorne Baring, managing director of B
Capital Wealth Management in Geneva.
But advances were muted as a result of increased
saber-rattling in the Ukraine, as armed men seized the
parliament in Ukraine's Crimea region and raised the Russian
flag, alarming Kiev's new rulers, who urged Moscow not to abuse
its navy base rights on the peninsula by moving troops around.
The White House warned Russia to respect Ukraine's
sovereignty and territorial integrity and told Moscow to avoid
"provocative" actions with regard to the crisis-hit country.
The Russian ruble touched a five-year low against the dollar
, while Ukraine's hryvnia fell to a record low
after its central bank abandoned its managed exchange rate
The geopolitical uncertainty caused investors to seek the
safety of U.S. Treasuries, driving yields to
two-week lows. The 10-year note was yielding 2.655 percent.
The Japanese yen and Swiss franc, both
traditional safe-haven plays in foreign exchange, gained.
"There are definitely fears about geopolitics; the general
mood toward emerging markets is not great. The concern is this
could develop into a proper civil war in Ukraine that splits the
country," said Manik Narain, strategist at UBS in London.
Wall Street advanced modestly and was once again above its
all-time closing high of 1,848,38 set on Jan. 15 after Yellen's
comments and an unexpected rise in durable goods orders,
excluding transportation. The index has been unable to hold
above the record despite several attempts this week.
"Durables came in better than feared, but it is difficult to
tell what the weather impact was and what the impact of an
actual slowdown might be," said Joseph Tanious, global market
strategist at J.P. Morgan Asset Management in New York.
If the view holds that harsh winter weather is to blame,
investors are likely to expect the Fed to keep trimming its
bond-buying program by $10 billion at each policy meeting,
leaving it on track to end the purchases completely by the end
of the year.
The Dow Jones industrial average rose 72.41 points,
or 0.45 percent, at 16,270.82. The Standard & Poor's 500 Index
was up 8.49 points, or 0.46 percent, at 1,853.65. The
Nasdaq Composite Index was up 29.32 points, or 0.68
percent, at 4,321.39.
The MSCI world equity index, which tracks
shares in 45 nations, gained 1.20 points, or 0.29 percent, to
Yellen's testimony curbed declines in Europe, with the
FTSEurofirst 300 index, closing down 0.2 percent after
an earlier fall of 1 percent and the euro gained 0.2
percent to $1.371 after it dropped to a two-week low of $1.3641.
Aside from tensions in Ukraine, declines in Europe were
stemmed by a downward revision to Spain's fourth-quarter gross
domestic product and ECB data that showed little improvement in
the amount of credit reaching euro-zone firms.
German inflation figures suggested there would be scant
pick-up in euro-zone inflation, due on Friday.
The ECB meets next week and is under pressure to cut
interest rates again and dip back into its unconventional policy
cupboard to ensure the euro zone does not become mired in
In bond markets, the possibility that more moves are coming
from the ECB and a strong debt auction in Italy helped
lower-rated Italian and Spanish debt keep pace with safe-haven
Copper dropped to a three-month low below $7,000 a
tonne, extending its losses over the past week on recent
concerns about slower growth in China.
Gold prices edged up due to a steady dollar but remained
well below the previous day's four-month high as buyers of
coins, bars and jewelry in Asian markets held off in expectation
of a further price drop. Spot gold advanced 0.1 percent
$1,333.10 an ounce, off Wednesday's high of $1,345.35.
After recent falls, the yuan steadied for a second
day, trading at 6.1279 per dollar, just off Wednesday's
low of 6.1351. A bounce in Chinese shares helped Asian shares
gain 0.3 percent.
Dealers suspect the People's Bank of China has engineered
the recent decline in the country's currency to inject more
two-way volatility into the market and offset speculators who
had bet on its continued rise.