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NEW YORK Stocks in major markets rose on Monday while gold, the yen and other safety assets fell after Federal Reserve Chair Janet Yellen reinforced the need for "extraordinary" commitment to support the U.S. economy.
The euro bounced back against the U.S. dollar even as softer-than-forecast inflation numbers added to the discussion of whether the European Central Bank will cut interest rates when it meets later this week.
The S&P 500 posted its 14th monthly gain in the past 17 months and the fifth straight winning quarter, matching quarterly streaks seen in 2006-2007 and 2003-2004.
Yellen on Monday gave a strong defense for the Fed's easy-money policies in a speech to a community investment conference in Chicago.
"I think this extraordinary commitment is still needed and will be for some time, and I believe that view is widely shared by my fellow policymakers at the Fed," Yellen said.
Last week, top Fed officials scrambled to clarify just when the U.S. central bank would finally tighten monetary policy after comments by Yellen intensified a guessing game among investors.
"What Yellen did today was to ... provide more clarity. When there aren't concerns about the Fed tightening, the market can breathe easier," said Joseph Tanious, global market strategist at J.P. Morgan Asset Management in New York.
At the end of trading on Monday, the Dow Jones industrial average .DJI rose 134.60 points, or 0.82 percent, to 16,457.66; the S&P 500 .SPX added 14.72 points, or 0.79 percent, to 1,872.34; the Nasdaq Composite .IXIC gained 43.24 points, or 1.04 percent, to 4,198.99.
An MSCI gauge of major stock markets .MIWD00000PUS rose 0.7 percent. An index of European blue-chips .STOXX50E hit its highest intraday level in more than five years, though the FTSEurofirst 300 index of leading shares closed less than 0.1 percent higher .FTEU3.
Tokyo's Nikkei stock average .N225 gained 0.9 percent to touch a three-week high, supported by comments from Chinese Premier Li Keqiang on Friday that Beijing was ready to support the cooling economy, saying the government had the necessary policies in place and would push ahead with infrastructure investment.
U.S.-dollar denominated Nikkei futures edged up 0.1 percent.
INFLATION DATA AND THE ECB
The euro rose to a three-week high against the yen and edged up versus the dollar after hitting a one-month low against the greenback on Friday, even as inflation across the euro zone fell to the lowest level in over four years. The data initially supported expectations the ECB could act to counter the deflationary threat as early as this week.
Forex traders polled by Reuters, however, said the ECB will keep monetary policy unchanged when it meets on Thursday.
"The euro got trashed around the inflation numbers but then came roaring back," said Graham Davidson, a spot dealer at NAB in London.
"I think the market has probably priced in the story on the fall in inflation. The bottom line is that the economy is recovering and my hunch would be that the (ECB) does nothing."
The euro traded as high as $1.3806 from $1.3704 on Friday. It was recently up 0.17 percent at $1.3776.
The yield on 10-year U.S. Treasuries rose on Monday to as high as 2.7680 percent, trading within the top half of last week's range, but was last near the day's lows at 2.7190 percent. That compares with 2.7120 percent late in Friday's session.
Bond market participants also stuck to expectations that the U.S. government's employment report for March, due out on Friday, will be better than expected, bolstering the hawkish tone that Yellen took earlier this month at a press conference.
"We're in a relatively hawkish environment, and some investors may feel bonds are at an attractive level to short," said Jeffrey Young, U.S. interest rate strategist at Nomura Securities International in New York.
In emerging markets, the Turkish lira hit its highest level against the U.S. dollar this year after Prime Minister Tayyip Erdogan declared victory in local polls that had become a referendum on his rule.
The results stirred hopes that months of political turbulence would ease. The lira touched 2.1298, its strongest level against the greenback since late December.
Spot gold prices fell 0.7 percent after hitting their lowest in nearly seven weeks.
Crude oil futures dipped in volatile end-of-quarter trading, pressured by news Russia was withdrawing some troops on the Ukrainian border and concerns about the struggling U.S. labor market voiced by Fed chair Yellen.
U.S. crude oil futures dipped 0.2 percent after three days of gains and Brent fell 0.3 percent after four winning days.
(Reporting by Rodrigo Campos; additional reporting by Sam Forgione, Ryan Vlastelica, Michael Connor and Jonathan Spicer; Editing by Leslie Adler and Dan Grebler)