Steady growth signs lift European stocks and bonds

Credit: Reuters/Brendan McDermid

1 of 4. Traders work on the floor of the New York Stock Exchange May 16, 2014.

The minutes of the April session also showed Fed staff discussed approaches to raising short-term interest rates, but that it was not a sign rate hikes would come any time soon.

Fed Chair Janet Yellen said in March the U.S. central bank could raise rates six months after its bond-buying program ended.

Some analysts said the minutes suggested that the Fed's plan to reduce of its stimulus program remained in place, despite comments from some Fed participants that it is too early to confirm whether or not the U.S. economy is moving to sustained above-trend growth.

'The baseline scenario is still for slow, but steady improvement; there is no inflation risk and the Fed will keep tapering,' said Richard Franulovich, senior currency strategist at Westpac in New York.

The dollar rose 0.1 percent against the yen at 101.45. It earlier tumbled to its lowest in more than three months at 100.80 yen, hurt by optimistic comments about the economy from Bank of Japan Governor Haruhiko Kuroda, who gave no hint of further monetary easing in the near term.

The dollar also rose against the euro.

MSCI's all-world equity index .MIWD00000PUS, which tracks shares in 45 nations, gained 0.5 percent, while European shares .FTEU3 ended up 0.6 percent.

On Wall Street, the Dow Jones industrial average .DJI rose 158.75 points, or 0.97 percent, to end at 16,533.06, the S&P 500 .SPX gained 15.2 points, or 0.81 percent, to 1,888.03 and the Nasdaq Composite .IXIC added 34.65 points, or 0.85 percent, to 4,131.54.

Stocks added to gains following the minutes, thought they were strongly higher before the release, rebounding after a sell-off on Tuesday. It was the S&P 500's third advance in the past four sessions.

'The minutes are in line with what investors are thinking, which is that we see a rebound in growth, but it is not to a point where the economy looks overly strong,' said Robert Pavlik, chief market strategist at Banyan Partners LLC in New York.

In the bond market, U.S. 10-year Treasuries pared price losses after the release of the minutes.

Benchmark 10-year Treasury notes were last down 7/32 in price to yield 2.536 percent, from 2.509 percent late Tuesday.

Much of the price weakness in the long end of the Treasuries market had taken place in the run-up to the minutes. Traders said that profit-taking after last week's rally in 10-year notes and 30-year bonds had also weakened prices on those securities.

OIL RISES, GOLD FALLS

Gold stayed lower as the dollar climbed after the Fed minutes. Spot gold was down 0.2 percent at $1,290.84 an ounce.

Oil prices rose on the day, supported by an industry report showing U.S. crude inventories had unexpectedly fallen last week and by persistent disruption to Libya's output amid renewed fighting.

U.S. crude rose $1.70 to settle at $104.07, while Brent settled at $110.55, up 86 cents.

(Additional reporting Gertrude Chavez-Dreyfuss and Angela Moon in New York; Editing by James Dalgleish, Chizu Nomiyama and Dan Grebler)

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