* Stocks surge as Yellen pledges to stay course on Bernanke
* Dollar rises, oil prices steady on Yellen's congressional
* Gold hits three-month high, U.S. government debt sells off
By Herbert Lash
NEW YORK, Feb 11 The dollar and global equity
markets rallied 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.
Stock indices on Wall Street surged more than 1 percent
while the U.S. currency rebounded against the euro and gained
against the yen after Yellen's testimony 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 scaling back
its economic stimulus.
A potential market headwind also appeared to be removed
after Republican leaders in the U.S. House of Representatives
agreed to advance legislation that extends Washington's
borrowing authority for a year without conditions.
A vote expected late Tuesday would mark a dramatic shift
from the confrontational fiscal tactics House Republicans have
used over the past three years, culminating in last October's
16-day shutdown of the federal government in Washington.
The benchmark S&P 500 posted its best four-day
performance in 13 months, gaining almost 4 percent, and was
within 1.5 percentage points of its all-time high reached a
Stocks in Europe, emerging markets and Canada also rallied
as Yellen emphasized continuity in the Fed's policy, saying she
strongly supports the tact 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, and its emerging
markets index both gained 1.1 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 more than 1.5
percent, while Bay Street in Toronto rose 0.93
On Wall Street, the Dow Jones industrial average rose
219.05 points, or 1.39 percent, to 16,020.84. The S&P 500
gained 22.42 points, or 1.25 percent, to 1,822.26 and the Nasdaq
Composite added 47.533 points, or 1.15 percent, to
"'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 U.S. currency jumped 0.4 percent against the Japanese
yen to 102.65, while the euro fell 0.07 percent to
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 12/32 to yield 2.7222 percent.
Gold hit a three-month high and oil prices rose, with Brent
crude edging above $109 a barrel.
Brent crude rose 5 cents to settle at $108.68 a
barrel. U.S. crude edged down 12 cents to settle at
Gold futures for April delivery rose 1.3 percent to
$1,291.40 an ounce.