* Global stocks gain after Fed, BoJ spur risk appetite
* Dollar eases after Fed reiterates low-rate pledge
* Oil tops $82 as OPEC leaves output targets unchanged
* Long-dated Treasuries rise as U.S. producer prices fall
(Updates with close of European markets)
By Herbert Lash
NEW YORK, March 17 (Reuters) - World stocks and commodity
prices rose on Wednesday after a drop in one reading of U.S.
inflation added weight to a Federal Reserve pledge to keep
interest rates low for some time, boosting risk appetite.
The Dow industrials gained for a sixth straight session to
hit an intraday 17-month high, while a major pan-European stock
index surged to a 17-month closing high.
The U.S. dollar fell against higher-yielding currencies
such as the Australian dollar, while the yen weakened as
commitments by both the Fed and the Bank of Japan to low rates
instilled confidence in investors to seek higher returns
elsewhere. For details see: []
"Investors like knowing where rates are going to be for at
least the next three months," said Marc Pado, U.S. market
strategist at Cantor Fitzgerald & Co in San Francisco. "Knowing
we have that stable environment to look forward to is what's
lifting stocks."
The U.S. Labor Department said the index for prices paid at
the farm and factory gate fell 0.6 percent last month, the
largest decline since July, after a 1.4 percent increase in
January. The decline in producer prices, led by tumbling energy
costs, reinforced views that inflation is not a worry and the
Federal Reserve will stick to keeping interest rates ultra-low
for an extended period.
The Chicago Board Options Exchange volatility index, a
gauge of investor sentiment better known as the Vix <.VIX>,
fell more than 5 percent to lows last seen in May 2008. The
Vix, a 30-day risk forecast, typically moves inversely to the
S&P 500 stock index. A lower reading suggests there is a
greater desire in the markets to take risk.
A similar European gauge, the VDAX-NEW volatility index
<.V1XI>, fell 2 percent.
MSCI's all-country world stock index <.MIWD00000PUS> rose
almost 1 percent. The pan-European FTSEurofirst 300 <>
index of regional shares rose 0.92 percent to end at 1,070.90
points, its highest close since October 2008. []
At 1 p.m., the Dow Jones industrial average <> was up
48.98 points, or 0.45 percent, at 10,734.58. The Standard &
Poor's 500 Index <.SPX> was up 7.06 points, or 0.61 percent, at
1,166.52. The Nasdaq Composite Index <> was up 14.88
points, or 0.63 percent, at 2,392.89.
Despite the new highs in a stock rally from decade lows a
year ago, investors remained cautious as the recovery from the
deepest global recession since World War Two remained weak.
"Governments and central banks have put massive fiscal and
monetary stimulus into the system. The big question for this
year is what happens when they withdraw it," said Philippe
Gijsels, head of research at BNP Paribas Fortis Global Markets
in Brussels.
"This rally, which we still consider to be a bear market
rally, has gone quite a bit further than we thought," he said.
U.S. government debt prices traded near break-even as the
rally in world equity markets reduced the safe-haven appeal of
bonds and helped to erase earlier gains tied to the hefty drop
in producer prices. []
Benchmark 10-year notes <US10YT=RR> rose 1/32 in price to
yield 3.65 percent.
The euro fell from five-week highs against the dollar as
sentiment remained negative on the euro zone single currency
despite pronouncements of support by European Union members for
debt-strapped Greece.
"If you look at the broader picture, we're seeing most
major currencies -- sterling, Australian and New Zealand
dollars -- rallying against the U.S. dollar. Clearly, risk
appetite is up," said John McCarthy, director of FX trading at
ING Capital Markets in New York.
The euro <EUR=> was down 0.05 percent at $1.3762. The
dollar was down against major currencies, with the U.S. Dollar
Index <.DXY> off 0.20 percent at 79.597.
Oil extended gains to above $82 a barrel after the
Organization of Petroleum Exporting Countries decided to leave
production targets unchanged, and Saudi Arabia's oil minister
described crude prices as "beautiful." []
OPEC, which pumps roughly one in every three barrels of
oil, agreed at its meeting in Vienna to keep record output
curbs of 4.2 million barrels per day in place, even though
higher prices have seen members pump extra oil.
U.S. light sweet crude oil <CLc1> rose 63 cents to $82.33 a
barrel.
Gold prices retreated from earlier gains.
Spot gold prices <XAU=> fell 75 cents at $1,123.90 an
ounce.
Earlier, Japan's Nikkei <> closed up 1.17 percent,
boosted by the BoJ's decision to loosen monetary policy.
(Reporting by Ryan Vlastelica, Gertrude Chavez-Dreyfuss and
Richard Leong in New York; David Sheppard and Brian Gorman in
London; Writing by Herbert Lash; Editing by Leslie Adler)
