* MSCI all-world, European stock indices gain, along with
* Dollar up against the yen
* U.S. bonds pare losses
(Adds market reaction to Fed minutes)
By Caroline Valetkevitch
NEW YORK, May 21 The dollar extended gains
against the yen and stocks moved higher on Wednesday after the
release of minutes from the Federal Reserve's most recent
meeting indicated no imminent rise in interest rates.
Minutes of the April session showed Fed staff presented
several approaches to raising short-term interest rates, but
said the discussion was simply "prudent planning" and not a sign
rate hikes would come any time soon.
Some analysts said the minutes show the Fed's tapering of
its stimulus program remains fully in place.
"The baseline scenario is still for slow, but steady
improvement; there is no inflation risk and the Fed will keep
tapering," said Richard Franulovich, senior currency strategist
at Westpac in New York.
Fed Chair Janet Yellen said in March the U.S. central bank
could raise rates six months after its bond-buying program
MSCI's all-world equity index, which tracks
shares in 45 nations, was up 0.5 percent, barely budging after
the minutes. European shares ended up 0.6 percent.
On Wall Street, the Dow Jones industrial average was
up 160.19 points, or 0.98 percent, at 16,534.50. The Standard &
Poor's 500 Index was up 14.92 points, or 0.80 percent, at
1,887.75. The Nasdaq Composite Index was up 33.60
points, or 0.82 percent, at 4,130.49.
Stocks are rebounding after a sell-off on Tuesday, putting
put the S&P 500 on track for its third advance in the past four
In the foreign exchange market, the dollar was up 0.1
percent against the yen at 101.44.
Earlier in the day, the dollar fell to a 3-1/2-month low
against the yen on optimistic comments from Bank of Japan
Governor Haruhiko Kuroda, who gave no hint of further monetary
easing in the near term.
U.S. 10-year Treasuries pared price losses after the
release of the minutes.
Benchmark 10-year Treasury notes were last down
10/32 in price to yield 2.54 percent compared with 2.509 percent
late Tuesday. Earlier in the session, 10-year notes were down
10/32 in price.
"It's the same old dovish slant. The overall theme is that
the Fed will continue to push until it decides not to," said
Thomas Roth, executive director of U.S. government bond trading
at Mitsubishi UFJ Securities USA in New York.
Oil prices rose, supported by an industry report showing
U.S. crude inventories had unexpectedly fallen last week and by
persistent disruption to Libya's output amid renewed fighting.
U.S. crude rose $1.70 to settle at $104.07, while
Brent settled at $110.55, up 86 cents.
Earlier on Wednesday, Yellen gave a commencement address at
New York University's commencement ceremony, but did not make
any remarks about the economy or monetary policy.
In recent comments from Fed officials, New York Fed
President William Dudley said on Tuesday that inflation should
"drift upward" toward the Fed's 2 percent goal, but a swift
climb in inflation was unlikely. Philadelphia Fed President
Charles Plosser said the $2.5 trillion in reserves accumulated
by banks could trigger more rapid inflation.
(Additional reporting by Nigel Stephenson and Alex Lawler in
London; Gertrude Chavez-Dreyfuss and Richard Leong in New York;
Editing by John Stonestreet, Toby Chopra, James Dalgleish, Chizu
Nomiyama and Dan Grebler)