September 13, 2012 / 5:11 PM / 5 years ago

GLOBAL-MARKETS-U.S. stocks rally after new Fed easing program

* U.S. stocks rally after Fed eases

* Benchmark 10-year Treasury yield rises

* U.S. dollar extends losses versus Japanese yen after Fed eases

* Fed says it will buy more MBS starting Friday

By Ellen Freilich

NEW YORK, Sept 13 (Reuters) - U.S. stocks and Treasury yields rose while the dollar weakened on Thursday after the Federal Reserve launched another stimulus program, saying it will continue to buy mortgage related debt and other securities until the outlook for jobs improves substantially so long as inflation remains contained.

As part of its new round of quantitative easing,the Fed said it would buy $40 billion of mortgage debt per month and would keep interest rates exceptionally low until the middle of 2015.

“The market got what it wanted,” said James Meyer, chief investment officer at Tower Bridge Advisers in West Conshohocken, Pennsylvania. “Stocks immediately shot up.”

The Dow Jones industrial average gained 76.35 points, or 0.57 percent, to 13,409.70. The Standard & Poor’s 500 Index gained 7.29 points, or 0.51 percent, to 1,443.85. The Nasdaq Composite Index gained 14.21 points, or 0.46 percent, to 3,128.52.

The MCSI index of global shares was up 0.46 percent to 333.26.

Meyer said the rally might not be long-lived, since risk assets have already been rallying on the view the Fed would ease monetary policy further.

Brent crude oil prices rose to $116.44 per barrel on the view that monetary easing would lead to more economic growth and more demand for oil.

“We could see higher oil prices on the idea of growing demand alone,” said Carl Larry, president of Oil Outlooks in New York.

U.S. government debt prices turned negative in choppy trading after the Fed’s announcement as investors chose riskier assets for potentially better returns over safe-haven U.S. government debt with low yields.

The benchmark 10-year Treasuries last traded down 11/32 in price, its yield rising to 1.80 percent.

The 30-year bonds fell 28/32 in price to yield 2.97 percent.

The dollar weakened against the euro with the euro at $1.2913. It gained against the yen. Earlier, it had fallen to a 7-month low versus the yen.

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