* U.S. shares climb, Fed statement due Wednesday
* Dollar up against the yen for second day
* Brent crude rises to $106
By Leah Schnurr
NEW YORK, June 18 U.S. equities pushed higher on
Tuesday as investors grew more confident that the Federal
Reserve would temper its recent statements on the future
reduction of U.S. monetary support, while still pointing to
The dollar slipped 0.2 percent against a basket of
currencies but rose for a second day against the yen.
The Federal Reserve meeting, which started on Tuesday, has
taken on greater significance since Fed Chairman Ben Bernanke
said in May that stimulus could be scaled back if the U.S.
economy gains momentum. The Fed will issue its policy statement
on Wednesday, followed by a news conference by Bernanke.
Last month's comments threw a wrench in the stock market's
rally, caused U.S. benchmark bond yields to rise and hurt the
dollar. The Fed is currently buying $85 billion in bonds monthly
to keep borrowing costs low and boost demand.
Wall Street ended nearly 1 percent higher, with market
breadth strong even as trading volume was light. U.S. bond
prices were little changed, with the benchmark 10-year Treasury
yield trading at 2.185 percent.
"Stocks are higher as investors adjust to the fact that not
only will the Fed not announce tapering tomorrow, but that the
economy is quite capable of growing without it," said David
Kelly, the chief global strategist for JPMorgan Funds in New
York, which has about $400 billion in assets under management.
"There are reasons to be cautious and uncertain, but the
market is still cheap and should continue to expand for a long
time," he said, adding that he was overweight on cyclical
groups, which are tied to the pace of growth.
The benchmark S&P 500 has surged 15 percent since the start
of 2013, but the rally in stocks is expected to decelerate in
the latter part of the year, putting equities only modestly
beyond their record highs, a Reuters poll found.
Equity markets took little direction from data that showed
U.S. consumer prices rose in May and a gauge of underlying price
pressures showed signs of stabilization after a long decline.
That could be encouraging to Fed policymakers who would like to
see stronger inflation.
The Dow Jones industrial average gained 138.38
points, or 0.91 percent, to end at 15,318.23. The Standard &
Poor's 500 Index gained 12.77 points, or 0.78 percent, to
1,651.81. The Nasdaq Composite Index gained 30.05
points, or 0.87 percent, to 3,482.18.
European shares ended down 0.1 percent. Stocks
found some support in a rise in investor sentiment in Germany
that suggested Europe's largest economy is on the slow road to
recovery. But it was only a brief distraction ahead of the Fed.
A measure of global stock markets was up 0.4
The dollar gained against the Japanese yen, rising 1 percent
to 95.44 yen. The euro rose 0.2 percent to
$1.3397, boosted by improved German investor sentiment.
"Even if they're considering tapering moving forward,
tapering isn't tightening. They're still going to be easing,
they're still going to be expanding their balance sheet. They
wouldn't be tightening until they start to shrink the balance
sheet," said Eric Viloria, currency strategist at Forex.com in
Treasuries were choppy, with bond investors focused on the
Fed. Benchmark 10-year Treasuries were off 2/32 in price to
yield 2.185 percent. Thirty-year bonds added 5/32 in
price to yield 3.34 percent.
The looming Fed statement put a cap on gains in oil prices
in sluggish trading. Brent settled up 55 cents at
$106.02, while U.S. oil was up 67 cents at $98.44.
Until the Fed's policy decision, oil trading will be largely
muted, said Addison Armstrong, director of market research at
Tradition Energy in Stamford, Connecticut.
"I'd expect we are going to see quiet trading between now
and 23 and a half hours from now," he said.