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* Stocks rally as Yellen pledges to stay course on Bernanke policies
* Dollar gains, oil prices steady on Yellen's congressional remarks
* Gold rises to three-month high, U.S. government debt sells off
By Herbert Lash
NEW YORK, Feb 11 (Reuters) - The dollar and prices on global equity markets rose on Tuesday after Federal Reserve Chair Janet Yellen said she expects the U.S. central bank to continue trimming its bond purchases, a sign the Fed believes the economy is on track for further growth.
Equity markets surged and the U.S. currency trimmed losses against the euro and gained against the yen after the release of Yellen's written testimony for her appearance before the House Financial Services Committee.
Yellen said recent volatility in global financial markets did "not pose a substantial risk to the U.S. economic outlook" and reiterated that the Fed was on track to keep reducing its economic stimulus.
A potential headwind for investors appeared to be removed after Republican leaders in the U.S. House of Representatives agreed to advance legislation raising Washington's borrowing authority without conditions. A vote is expected late Tuesday.
Stocks in Europe, emerging markets, Canada and on Wall Street rallied as Yellen emphasized continuity in the Fed's policy strategy, saying she strongly supports the approach of her predecessor, Ben Bernanke.
"The last thing she wants to do at this point is complicate things or muddy a well-established message. 'Do no harm' is her motto unless the data changes more than we have seen so far," said Brad McMillan, chief investment officer at Commonwealth Financial in Waltham, Massachusetts.
MSCI's all-country world index, which measures stock performance in 45 countries, rose 0.89 percent, and its emerging markets index gained 1.08 percent.
In Europe, the FTSEurofirst 300 index of leading regional shares closed up 1.25 percent at 1,317.30. Stock markets in Brazil and Mexico jumped almost 2 percent, while Bay Street in Toronto rose 0.74 percent.
On Wall Street, the Dow Jones industrial average rose 144.43 points, or 0.91 percent, at 15,946.22. The Standard & Poor's 500 Index was up 14.03 points, or 0.78 percent, at 1,813.87. The Nasdaq Composite Index was up 28.66 points, or 0.69 percent, at 4,176.84. .
"'Stay the course' is in my opinion the message the Street wanted to hear," said Phil Orlando, chief equity strategist at Federated Investors in New York. "The Fed believes these weather issues, these (emerging market) issues are transitory and we are in a sustainable growth path for U.S. GDP."
The dollar came off nearly two-week lows after Yellen signaled there would no immediate deviation from the Fed's winding down of its massive bond purchases.
The dollar jumped against the Japanese currency to as high as 102.66 yen, but later fell back to 102.60, still up 0.36 percent for the day.
The U.S. currency trimmed losses against the euro, initially moving to $1.3662 from $1.3678 before Yellen's testimony was released. Later it was at $1.3652.
U.S. Treasuries slid after Yellen said she strongly supported the Fed's monetary policy strategy, suggesting its current reduction in bond purchases was on track. Her remarks dispelled fears the economy was worse than expected.
The price of benchmark 10-year Treasury notes fell 13/32 to yield 2.7259 percent.
Gold hit a three-month high and oil prices rose, with Brent crude edging above $109 a barrel.
Brent crude was up 25 cents at $108.88 a barrel. U.S. crude edged down 4 cents to trade at $100.02.
Gold futures for April delivery rose 1.3 percent to $1,291.20 an ounce.