The US Federal Reserve’s decision to keep providing a source of cheap money has further boosted world sharemarkets, setting up Wall Street for its longest rally since August last year.
The Dow Jones Industrial Average also hit a 17-month high as investors piled into riskier assets after the Fed signaled it would keep interest rates at historic lows for some time.
Commodities prices gained and the dollar fell against currencies most closely aligned with global growth prospects. Boosting sentiment, the producer-price index for finished goods dropped by more than expected, reducing the threat of inflation and the likelihood of a rates rise.
The Dow closed 47.69 points, or 0.5%, higher at 10,733.67. Economic bellwether Alcoa jumped 4.8%, as metals futures climbed. Gains in commodities also benefited Exxon Mobil and Chevron, lifting both more than 1%.
The S&P 500 index rose 0.6% to 1166.21 with the energy sector leading the climb, as crude oil prices topped $US82 per barrel. The Nasdaq Composite rose 0.5% to 2389.09.
Other markets
European stock markets ended higher, supported by strength in the basic resources and banking sectors.
Better-than-expected UK unemployment data raised hopes that the country's recovery is gaining traction. Figures showed unemployment fell at its fastest monthly pace for over 12 years in February, with a jobless rate of 4.9%, versus expectations for a reading of 5.1%.
Resource stocks gained as gold and copper prices advanced, with Fresnillo up 3.4% and ArcelorMittal up 2.7%.
Banks also got a lift from the prospect of continued low rates. UniCredit led the sector higher, rising 6.3% after reporting a much better-than-expected fourth-quarter net profit. Among other banking stocks, HSBC gained 2.4%, while Société Générale added 2.2%.
In mergers and acquisitions, UK bus and rail operator Arriva rose 16.8% after the company said it had received an unsolicited takeover approach.
The pan-European Stoxx Europe 600 Index closed up 0.9% at 261.34. The UK's FTSE 100 Index rose 0.4% to 5644.63, France's CAC-40 Index added 0.5% to 3957.89 and Germany's DAX closed up 0.9% at 6024.28.
Most major Asian markets also got a boost. In Japan. the Nikkei Stock Average of 225 companies gained 1.2% to 10846.98.
Australia's S&P/ASX 200 rose 1.2% to 4853.17 and Korea's Kospi was up 2.1% 1682.86.
Chinese stocks also shook off lingering worries of late about monetary tightening, lifting the Shanghai Composite 1.9% to 3050.48 – the benchmark's best percentage gain since early February.
Hong Kong's Hang Seng Index added 1.7% to 21,384.49 and Taiwan's Taiex climbed 2% to 7847.84, while India's Sensex rose 0.8% to 5231.90 and Singapore's Straits Times Index advanced 0.8% to 2919.30.
Commodities: Oil, gold up
Crude futures were higher but some of the earlier gains were pared as a key US inventory data report was in line with expectations and traders took the opportunity to make some profits.
Light, sweet crude for April delivery settled $US1.23, or 1.5%, higher at $US82.93 a barrel in New York. Brent crude on the ICE futures exchange was $US1.43, or 1.8%, higher at $US81.96 a barrel.
Gold futures were also higher. The most-active April contract settled $US1.70, or 1.5%, at $US1124.20 an ounce in New York. March gold was up $US1.80 at $US1124.
Currencies: Dollar down, pound up
The US dollar fell as investors turned their attention to higher-yielding currencies. Besides the commodities-linked currencies, the pound was the best performer among major currencies after the UK government reported the largest drop in unemployment benefits since November 1997.
The pound reached a daily high of $US1.5380 – its strongest level since February 25 – before relinquishing some of its gains.
At the New York close, the pound was $US1.5326 from $US1.5257 late on Tuesday.
The euro lost some ground against the dollar, trading at $US1.3741 from $US1.3777.
The dollar was at ¥90.27 from ¥90.24, while the euro was at ¥124.24 from ¥124.32.
Nevil Gibson
Thu, 18 Mar 2010