* 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 rose 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 to grow further.
Stock indexes on Wall Street surged 1 percent or more, while
the U.S. currency rebounded against the euro and gained against
the yen after Yellen's testimony before the House Financial
A potential market headwind also could be removed after
Republican leaders in the U.S. House of Representatives agreed
to vote on legislation that extends Washington's borrowing
authority for a year without conditions.
A vote scheduled for Tuesday night 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.
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.
The benchmark S&P 500 posted its best four-day
performance in 13 months, gaining 3.9 percent over the period,
and was within 1.7 percentage points of its all-time high
reached a month ago.
Stocks in Canada, Europe and emerging markets also rallied
as Yellen emphasized continuity in the Fed's policy, saying she
strongly supports the path 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 1.02 percent
and its emerging markets index gained 1.1 percent.
In Europe, the FTSEurofirst 300 index of leading
regional shares closed up 1.25 percent, while stock markets in
Brazil and Mexico jumped more than 1.5 percent.
Shares on Bay Street in Toronto rose 0.63 percent.
On Wall Street, the Dow Jones industrial average rose
192.98 points, or 1.22 percent, to 15,994.77. The S&P 500
gained 19.91 points, or 1.11 percent, to 1,819.75 and the Nasdaq
Composite added 42.871 points, or 1.03 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 0.36 percent against the Japanese
yen to 102.61, while the euro fell 0.05 percent to
1.3637 against the dollar.
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 interest rate on U.S. one-month Treasury bills fell to
the lowest in over a week on signs of progress to raise the
federal debt ceiling. Such a move would avert the government
delaying payments on its debt.
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 rose 5 cents to settle at $108.68 a
barrel. U.S. crude edged down 12 cents to settle at
U.S. COMEX gold futures for April delivery settled up
$15.10 an ounce at $1,289.80.