* Dollar hits fresh three-year lows vs basket of currencies
* European stocks climb, Nikkei closes up after Fed
* U.S. crude rises to 2-1/2 year peaks, gold at record
(Recasts with European market action, fresh quotes, detail)
By Mike Peacock
LONDON, April 28 (Reuters) - The dollar slid to three-year
lows on Thursday, helping U.S. crude oil up to a 2-1/2 year
high, and stocks rose worldwide as investors bet ultra-loose
U.S. policy will continue to drive money into riskier assets.
The Federal Reserve said on Wednesday it would complete its
$600 billion bond-buying programme in June but Chairman Ben
Bernanke signalled it was in no rush to tighten monetary policy
with the jobs market still in a "very, very deep hole."
[]
The Bank of Japan also maintained its rock-bottom policy
stance, moves that are likely to see both the dollar and yen
used as funding currencies to buy higher-yielding assets, such
as commodities and equities. []
"With the prospect of ultra easy monetary policy continuing
for the foreseeable future in the world's largest economy,
traders are feeling more confident about holding the bullish
view and risk appetite is expected to be high," said Jonathan
Sudaria, a night dealer at Capital Spreads in London.
European shares gained in early trade <>, up 0.2
percent, with the Fed showing no inclination to change tack.
World stocks as measured by the MSCI All-Country World Index
<.MIWD00000PUS> were up 0.7 percent by 0745 GMT.
"The markets will be reassured, though the punch bowl is
being replaced by a smaller punch bowl," Justin Urquhart
Stewart, director at Seven Investment Management, said of the
Fed's statement. "But with today's (U.S.) GDP figures expected
to be weaker, there will be a level of nervousness."
U.S. GDP data at 1230 GMT are expected to show growth slowed
to a 2 percent annualised rate or less in the first quarter.
[]
Japan's Nikkei average <> rose 1.6 percent, while
stocks elsewhere in Asia <.MIAPJ0000PUS> gained 0.4 percent.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
BOJ balance sheet vs Fed http://link.reuters.com/saq88r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
DOLLAR UNDER THE COSH
With the Fed stance jarring with central banks in Europe,
Asia and Latin America already raising interest rates, the
dollar index <.DXY>, which tracks its performance against a
basket of major currencies, fell to as low as 72.871 -- a level
not seen since July 2008.
It last stood at 73.062, down 0.6 percent on the day.
A Reuters poll on Wednesday showed most U.S. primary dealers
expect the Fed to keep interest rates near zero through the end
of 2011. []
Dealers said several central banks in Asia were spotted
buying the greenback to check sharp gains in their currencies.
The euro rose to a 17-month high of $1.4882 <EUR=> before
easing a little, while the Australian dollar scaled a fresh
29-year high near $1.0948 <AUD=D4>.
"It's obviously pretty much open water here until $1.50,"
Rob Ryan, FX strategist at BNP Paribas in Singapore, said of the
euro, adding that the Aussie dollar could try for $1.10.
In commodities markets, dollar weakness helped propel U.S.
crude <CLc1> to a 2-1/2 year peak of $113.70 a barrel. []
Spot gold <XAU=> climbed to a lifetime high of $1,532.91 an
ounce, breaking a record for the second straight session. It was
trading at $1,531.81 by 0745 GMT. []
U.S. Treasury yields were steady, having risen on Wednesday
as the market made room for upcoming seven-year supply.
In stark contrast, Greek government bond yields were set to
rise further due to continuing speculation the country will have
to restructure its debt. Two-year yields <GR2YT=TWEB> rose 2
percentage points to nearly 27 percent on Wednesday.
"There's no real turnaround in the sentiment ... If you're
talking about restructuring you really don't want to be there,"
one trader said.
(Additional reporting by Marius Zaharia in London, Ian Chua in
Sydney, Masayuki Kitano in Singapore and Ayai Tomisawa in Tokyo;
Editing by Toby Chopra)
