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GLOBAL MARKETS-Stocks hold gains after Fed minutes; dollar down
January 4, 2017 / 8:26 PM / 10 months ago

GLOBAL MARKETS-Stocks hold gains after Fed minutes; dollar down

* Wall Street keeps gains after release of Fed minutes

* Yields slip after U.S. Fed meeting minutes

* Oil prices rise on expected drop in U.S. inventories

* Dollar edges down from 14-year high (Updates to afternoon U.S. trading, adds settled oil prices)

By Saqib Iqbal Ahmed

NEW YORK, Jan 4 (Reuters) - Stock indexes around the world gained on Wednesday, bolstered by upbeat global economic data and by minutes from the Federal Reserve’s December meeting, which showed policymakers thought the U.S. economy could grow more quickly because of fiscal stimulus under the Trump administration.

The dollar retreated from a 14-year high against a basket of currencies, briefly hitting a session low, while U.S. Treasury debt yields slipped after the release of the minutes.

The minutes showed how broadly views within the Fed are shifting in response to U.S. President-elect Donald Trump’s promises of tax cuts, infrastructure spending and deregulation.

MSCI’s world index, which tracks shares in 46 countries, rose 0.84 percent to a three-week high.

The index found support from a batch of rosy economic reports from Europe, and got a boost from a second day of strength in U.S. stocks.

“Clearly, some of the members on the committee are taking a look at proposed fiscal changes, whether that’s tax cuts or infrastructure spending,” said Chris Zaccarelli, Chief Investment Officer for Cornerstone Financial Partners.

U.S. stocks have surged over the past two months on expectations that Trump will stimulate the economy with tax cuts and infrastructure spending, and eliminate regulations in the financial industry.

“It’s confirmation of what people were already expecting,” Zaccarelli said.

The Dow Jones Industrial Average rose 61.65 points, or 0.31 percent, to 19,943.41, the S&P 500 gained 13.49 points, or 0.60 percent, to 2,271.32 and the Nasdaq Composite added 50.69 points, or 0.93 percent, to 5,479.77.

Gains on Wall Street were supported by strength in consumer discretionary stocks.

European shares edged down from a one-year high with retailers in focus after standout faller Next cut its profit guidance and cautioned on future trade. Europe’s broad FTSEurofirst 300 index closed little changed at 1,443.80.

The dollar, which rose to its highest in 14 years against the euro and a basket of major currencies on Tuesday, touched a session low of 102.39 following the release of the Fed minutes, before recovering some ground.

The dollar index - which measures the greenback against a basket of six major rivals - was down 0.47 percent to 102.72, having hit a peak of 103.82 on Tuesday.

Meanwhile, oil prices rose on expectations that U.S. crude inventories are falling and signs that oil producers will stick to agreed output cuts that took effect this week.

Brent crude settled up 99 cents, or 1.78 percent, at $56.46 a barrel, and U.S. crude settled up 93 cents, or 1.78 percent, at $53.26.

In bond markets, the Fed minutes sent U.S. Treasury debt yields lower as the policy meeting struck a more uncertain tone than the market had expected.

While the minutes showed many policymakers considering faster interest rate increases in response to a quicker pace of economic growth, they also spelled out the downside risks which could limit economic growth, such as trade barriers and the dollar’s rise.

Both U.S. 10-year note and 30-year bond yields briefly touched session lows after the release of the Fed minutes.

The U.S. 10-year note was down 4/32 in price to yield 2.465 percent, compared with 2.454 percent late on Tuesday.

Gold touched a near-four week high helped by the retreating dollar and increased demand from major consumers China and India. Spot gold prices were up 0.38 percent at $1,163.24. (Reporting by Saqib Iqbal Ahmed; Additional reporting by Gertrude Chavez-Dreyfuss in New York and Noel Randewich in Noel Randewich; Editing by Nick Zieminski)

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