NEW YORK Chinese import data propelled stock markets around the world higher on Wednesday, with two benchmark U.S. indexes closing at records, while Japan's economic stimulus package continued to weigh on the yen, sending it to multi-year lows against the dollar and euro.
U.S. stock sentiment was eroded early by the Federal Reserve's premature release of the minutes of its last policy-setting meeting, but that was quickly ignored by most investors.
Instead, economic data from China set the mostly positive tone throughout the global trading day. Imports of key commodities rebounded in March, signaling rising domestic demand to drive the world's second-largest economy.
"This is two pieces of Chinese economic data in a row that have proven positive," said Art Hogan, managing director of Lazard Capital Markets in New York. Data on Tuesday showed annual consumer inflation in China cooled last month.
The Dow Jones industrial average .DJI ended up 128.78 points, or 0.88 percent, at 14,802.24. The Standard & Poor's 500 Index .SPX was up 19.12 points, or 1.22 percent, at 1,587.73. The Nasdaq Composite Index .IXIC was up 59.40 points, or 1.83 percent, at 3,297.25.
For the second day in a row, cyclical shares advanced as investors bought into the sector, which has lagged other sectors recently. As these groups are closely tied to the pace of economic growth, many investors viewed the advance as a sign that the market's rally has staying power.
Financial shares helped lead the advance, with the S&P financial sector index .SPSY gaining 1.2 percent, while the S&P information technology sector index .SPLRCT rose 1.8 percent.
The unexpected release of the Fed policy minutes briefly rattled investors. But after digesting the report, they viewed it as of lesser importance than the Chinese data.
Indeed, since the minutes indicated stimulus remains in place for now, they may even have helped U.S. stocks in the short term.
A few U.S. Federal Reserve policymakers expected to taper the pace of asset purchases by mid-year and end them later this year, while several others expected to slow the pace a bit later and halt the quantitative easing program by year-end, according to the minutes of the Fed's March meeting.
The MSCI all-world share index, .MIWD00000PUS, which tracks stocks in 45 countries, rose 1.2 percent to its highest level since March 18. The percentage gain on the index was the second best of 2013.
Europe's FTSEurofirst 300 index .FTEU3 was up 1.8 percent.
In the currency markets, the yen hit a more than three-year low against the euro and edged closer to 100 to the dollar as it extended a slide triggered by the Bank of Japan's massive monetary easing plan unveiled last Thursday.
But the same stimulus measure was a boon for Japanese stocks. Japan's Nikkei index .N225 ended up 0.7 percent, at its highest close since August 2008.
The euro is being supported by speculation that Japanese investors, looking for higher returns as the BOJ action depresses domestic yields, may turn to euro zone bonds.
The dollar was bid as the Fed minutes were seen as maintaining the bias to end measures to stoke economic growth.
"Once again, the minutes have sounded a slightly more hawkish tone and that's really what's benefiting dollar/yen," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
The euro was up 0.7 percent against the yen at 130.36 yen, while the dollar was up 0.8 percent against the yen at 99.78 yen. The yen touched a four-year low against the dollar.
The prospect of huge purchases of Japanese government bonds by the BOJ is seen as likely to send investors on a hunt for higher returns in assets denominated in currencies other than the rapidly weakening yen.
Japanese government bond futures fell sharply on Wednesday, prompting the Tokyo Stock Exchange to halt trading briefly while the 10-year cash bond yield rose to a four-week high.
However, highly rated euro zone bond yields, which have fallen on the hopes of Japanese demand, recovered from their recent lows.
U.S. Treasury note yields were last at 1.808 percent.
(Reporting by Nick Olivari; Editing by Chizu Nomiyama,; James Dalgleish, Nick Zieminski and Dan Grebler)