LONDON: Global stock markets powered higher Wednesday after Federal Reserve boss Janet Yellen hinted that the US central bank would not lift interest rates any time soon.
Wall Street rallied overnight after Yellen offered a more dovish outlook than expected on monetary policy, in her first public remarks since the Fed's March meeting.
The news sent Hong Kong and Shanghai equities soaring on Wednesday, but Tokyo fell on the back of a stronger yen which hurts exporters.
The largely positive mood spilled over into Europe where major stock markets gained about 1.80 percent in early afternoon deals.
"European equities are trading higher... on the back of a late rally in US stocks in the aftermath of a speech by US Fed chief Janet Yellen," said analyst Markus Huber at City of London Markets.
Yellen promised a cautious approach to future US interest rate hikes, saying the central bank has to pay heed to "broader concerns about global financial developments", including oil prices and the overall pace of growth.
A better-than-expected reading on US growth and other improved data recently had raised hopes that the global turmoil at the start of the year may have ended, and fuelled talk that the central bank might consider a further tightening of borrowing costs.
However, while Yellen pointed out that the world's top economy had "proven remarkably resilient" in the face of a global slowdown -- particularly in China -- and plunging oil prices, she took a dovish stance on monetary policy this year.
With the prospect of US rates remaining low for some time, traders moved out of the dollar, sending it tumbling against the yen, which in turn hit Japanese exporters and Tokyo's Nikkei stocks index.
The weaker greenback boosted many dollar-denominated commodities, which become cheaper for buyers using stronger currencies.
In turn, that gave a shot in the arm to Europe's metals and mining sector on Wednesday.
"Leading the way is the materials sector as commodities received a boost on the back of the weaker dollar," said analyst Brenda Kelly at traders London Capital Group.
Mining giant Anglo American surged 9.5 percent to 524.80 pence, Glencore won 6.5 percent to 153 pence and BHP Billiton added almost 6.0 percent to 794.40 pence.
Yellen added Tuesday that job creation remains strong and other signs of growth firm, even as the US manufacturing industry has been hit by the strong dollar and the sharp contraction in the oil and gas industry.
But she said that even if the US maintains a moderate growth rate, the Fed must heed "broader concerns about global financial developments", including oil prices and the overall pace of growth.
She also rejected arguments, including from some Fed officials, that inflation has increased to the point that policymakers must raise rates sooner rather than later.
"Despite some of her colleagues having expressed rather hawkish views of late especially as inflation has started to go up, Yellen made it very clear... that the downside risks to the economy are by far outweighing concerns about inflation possibly moving up in the months ahead," added Huber.
"This not only means that another interest hike is not on the cards any time soon but also that rates are likely to rise less this year than markets have already discounted."
- Key figures around 1100 GMT -
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London - FTSE 100: UP 1.8 percent at 6,215.10 points
Frankfurt - DAX 30: UP 1.8 percent at 10,065
Paris - CAC 40: UP 2.0 percent at 4,453.50
EURO STOXX 50: UP 1.8 percent at 3,057.90
Tokyo - Nikkei 225: DOWN 1.3 percent at 16,878.96 (close)
Shanghai - Composite: UP 2.8 percent at 3,000.64 (close)
Hong Kong - Hang Seng: UP 2.2 percent at 20,803.39 (close)
New York - Dow: UP 0.6 percent at 17,633.11 (close)
Euro/dollar: UP at $1.1324 from $1.1293 on Tuesday
Dollar/yen: DOWN at 112.22 yen from 112.78 yen
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