September 18, 2014 / 9:12 PM / in 3 years

GLOBAL MARKETS-Dollar hits six-year peak vs yen, stocks rally

* Dollar, stocks rise on differing rate views
    * S&P 500, Dow hit fresh closing record highs
    * Crude oil prices pressured by rising dollar

 (Adds close of U.S. markets)
    By Herbert Lash
    NEW YORK, Sept 18 (Reuters) - Investors focused on an
increase in the Federal Reserve's interest rate forecast boosted
the dollar to a more than six-year peak against the yen, while
global equity markets rallied and the Dow and S&P 500 set fresh
record highs on the Fed's unchanged timeline for eventual rate
hikes. 
    Leading British shares rose as investors bet Scotland would
remain in the United Kingdom after Thursday's referendum.
 
    A Thomson Reuters basket of 12 stocks listed on Britain's
FTSE 350 index, based in Scotland, has slowly risen over
the last two weeks. (link.reuters.com/wej72w)
    The dollar index, a gauge of the greenback's value
against six currencies, hit a high last seen more than four
years ago, lifted by the Federal Reserve's forecasts for
short-term rates on Wednesday that were higher than those
projected in June.
    Higher rates make the dollar more attractive, but at the end
of a two-day policy-setting meeting on Wednesday the Fed also
renewed a pledge to keep longer rates low for a unspecified
"considerable time."
    The dollar index and the euro retreated after the British
pound climbed as much as 0.83 percent to $1.6408 versus
the dollar on anticipation Scotland would remain in the UK. The
pound last traded up 0.6 percent at $1.6370. 
    "The dollar will be in a consolidation phase in the short
term after yesterday's sharp gains," said Greg Moore, senior
currency strategist at RBC Capital Markets in Toronto. 
    The dollar rose as high as 108.96, the strongest
since August 2008, and last traded at 108.76, up 0.36 percent.
    The euro rebounded, rising 0.4 percent to $1.2917.
    Wall Street rallied, with both the benchmark S&P 500 and Dow
indexes setting new intraday highs.
    The Dow Jones industrial average closed up 109.14
points, or 0.64 percent, to 17,265.99. The S&P 500 gained
9.79 points, or 0.49 percent, to 2,011.36 and the Nasdaq
Composite climbed 31.24 points, or 0.68 percent, to
4,593.43.
    In Europe, the FTSEurofirst 300 index of top
regional shares closed up 0.93 percent at 1,398.03. MSCI's
all-country world index rose 0.3 percent to
428.76.
    U.S. Treasury debt prices turned down, with investors
driving some shorter-maturity yields to highs not seen since May
2011 after the Fed on Wednesday raised its forecasts for some
interest rates.
    Yields on two-year notes touched a high of 0.597
percent before settling back.
    Yields on benchmark 10-year Treasury notes were
up to 2.6217 percent on a price decline of 6/32.
    The number of Americans filing new claims for unemployment
benefits fell more than expected last week, suggesting a sharp
slowdown in August job growth was probably an anomaly.
    While other U.S. data on Thursday showed some weakness in
home building and factory activity, the underlying trend
remained supportive of solid economic growth. 
    Crude oil fell, pressured by ample supply, concerns about
demand growth and a stronger dollar.
    A strong dollar makes dollar-priced commodities such as oil
more expensive for buyers using other currencies and tends to
weigh on oil prices.
    Brent settled down $1.27 at $97.70 a barrel, while
U.S. crude fell $1.35 to settle at $93.07 a day after
dropping on government data that showed U.S. crude inventories
rose 3.7 million barrels last week.  

 (Editing by Meredith Mazzilli, Dan Grebler and Bernadette Baum)

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