Andy Wong, Associated Press
KUALA LUMPUR, Malaysia — World stock markets bounced higher Thursday after prepared testimony for the confirmation hearing of incoming Federal Reserve chief suggested the U.S. central bank won't reduce its economic stimulus until March next year or later.
Janet Yellen, who is slated to replace Ben Bernanke as Fed chairman at the end of January, will testify before the Senate banking committee later Thursday. Analysts said her published introductory remarks were a boost for stock markets that have been propelled higher since the aftermath of the 2008 financial crisis by the Fed's super-low interest rate and bond buying policies.
While there was progress in the U.S. recovery, Yellen said the labor market and economy are "performing far short of their potential." She said unemployment was still too high and inflation still below target. She reiterated the world's No. 1 economy must show continued signs of improvement before the Fed starts tapering off its $85 billion of monthly bond purchases.
"That statement alone has changed the landscape of trade today," said Evan Lucas, market strategist with IG in Melbourne, Australia. It suggests the bond buying effort, which has kept commercial interest rates low to encourage borrowing and investment, will be kept in place at current levels until the end of the first quarter of next year, he said.
After stronger-than-expected U.S. hiring figures last week, some analysts had thought the Fed would start reducing its stimulus in December or January.
Major European benchmarks rose in early trading. Britain's FTSE 100 gained 0.8 percent to 6,683.56 and France's CAC-40 climbed 1 percent to 4,281.39. Germany's DAX added 0.9 percent to 9,133.84.
Futures indicated that U.S. stocks could gain further after closing Wednesday at record highs. S&P 500 futures were up 0.3 percent and Dow futures gained 0.2 percent.
In Asia, Tokyo's Nikkei 225 surged 2.1 percent to 14,876.41, also helped by renewed weakness in the yen as it approached 100 to the dollar.
China's Shanghai Composite rose 0.6 percent to 2,100.51 and Hong Kong's Hang Seng gained 0.8 percent to 22,649.15. Benchmarks in Australia, Taiwan, South Korea and Singapore also rose.
Mizuho Bank Ltd. in Singapore, however, said in a market commentary that tapering in December wasn't out of the picture as recent upbeat data pointed to a U.S. recovery.
It is also unclear if Yellen can justify maintaining the bond purchases at the current pace amid high government debt, analysts said.
In energy markets, benchmark crude for December delivery eased 22 cents to $93.66 in electronic trading on the New York Mercantile Exchange. The contract gained 84 cents to close at $93.88 on Wednesday.
The euro dropped to $1.3455 from $1.3488 late Wednesday. The dollar rose to 99.97 yen from 99.13 yen.
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