NEW YORK Stock indexes worldwide rebounded on Wednesday after concerns eased about the banking sector and Federal Reserve Chair Janet Yellen said the U.S. central bank has plenty of flexibility to adjust monetary policy if needed.
U.S. financial stocks, which had been hit in recent days on worries over the impact of low interest rates on banks' profitability and capital strength, rose after Yellen's comments that conditions in the United States would allow the Fed to proceed with "gradual" adjustments to policy.
Yellen's testimony to Congress boosted sentiment. Expectations of a 2016 rate rise have all but vanished, partly on weak U.S. economic data, even though the Fed's forecasts suggest members see more rate hikes during the year.
"What Yellen said has been taken positively," said Richard Sichel, chief investment officer of Philadelphia Trust Co in Philadelphia. “Stocks in general are cheaper now than they were three days ago or three months ago, so there’s an opportunity to step in."
The S&P financial index rose 0.4 percent. European shares snapped a seven-day losing streak, bolstered by solid earnings and a recovery in Deutsche Bank from 30-year lows.
The euro zone's banking index was last up 7 percent. It is still facing its seventh consecutive week of declines, the longest losing streak since 1998.
MSCI's all-country world equity index, which tracks shares in 45 nations, was last up 2.24 points, or 0.62 percent, at 360.67.
The Dow Jones industrial average was down 6.92 points, or 0.04 percent, to 16,007.46, the S&P 500 rose 7.81 points, or 0.42 percent, to 1,860.02 and the Nasdaq Composite jumped 45.21 points, or 1.06 percent, to 4,313.97.
Europe's broad FTSEurofirst 300 index was last up 1.8 percent, at 1,242.06. The index fell 1.6 percent and hit its lowest point since September 2013 on Tuesday.
Brent crude prices rose after one of the biggest declines since the 2008 financial crisis on Tuesday.
Iran's oil minister said Tehran was ready to negotiate with Saudi Arabia, suggesting the possibility of major producers cooperating to tackle a supply glut.
Brent crude was last up $0.39, or up 1.29 percent, at $30.71 a barrel. U.S. crude was last down $0.41, or down 1.47 percent, at $27.53 per barrel.
The dollar climbed from nearly four-month lows hit Tuesday against a basket of major currencies after Yellen's prepared remarks. The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.247 points or 0.26 percent, to 96.318.
"Ms. Yellen seems to be maintaining her faith in the outlook of the U.S. economy and still anticipates to raise rates. That’s what at the end of the day is supportive of the U.S. currency," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
The gains in U.S. shares weighed on demand for safe-haven U.S. Treasuries. Benchmark 10-year Treasury yields were last down 8/32 in price to yield 1.7565 percent, off a one-year low of 1.682 percent touched Wednesday.
Spot gold prices rose $5 or 0.42 percent, to $1,193.46 an ounce.
(Additional reporting by Dion Rabouin and Karen Brettell in New York and Abhiram Nandakumar in Bengaluru; Editing by Nick Zieminski)
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