By Herbert Lash
NEW YORK (Reuters) - Global equity markets mostly rose on Thursday after Janet Yellen, President Obama's choice to lead the Federal Reserve, signaled the U.S. central bank's loose monetary policy would remain in place for some time, while weak euro zone growth lifted the dollar.
Yellen defended the Fed's bold steps to spur economic growth, calling efforts to boost hiring "imperative" during a hearing over her nomination before the U.S. Senate Banking Committee.
Yellen's comments drove the Dow and the S&P 500 to fresh record highs after her prepared remarks on Wednesday spurred the two indices to closing highs and lifted European shares on Thursday before the hearing.
Canada's main stock index hit a two-week high, while the major stock indices in Mexico and Brazil rallied.
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Earlier in the session, the prepared remarks sparked a broad rally in Asia, led by a 2.1 percent jump in Japan's Nikkei to a six-month high.
U.S. Treasury debt prices rose, while spot gold prices rose 1.6 percent to extend gains for a second session.
The market initially had a bearish reaction to Yellen's responses to questions from the committee, "but as her comments have rolled in the market has found a little bit of stability and stocks rallied," said Ian Lyngen, senior government bond strategist at CRT Capital in Stamford, Connecticut.
MSCI's all-country world stock index rose 0.72 percent while, while the pan-European FTSEurofirst 300 index of leading regional shares gained 0.83 percent to close at a provisional 1,294.27.
The Dow Jones industrial average was up 36.16 points, or 0.23 percent, at 15,857.79. The Standard & Poor's 500 Index was up 6.25 points, or 0.35 percent, at 1,788.25. The Nasdaq Composite Index was down 4.59 points, or 0.12 percent, at 3,960.99.
Investors view Yellen, along with out-going Fed Chairman Ben Bernanke, as a strong proponent of the Fed's current ultra-loose monetary policy. They reckon a Fed under Yellen's leadership will continue stimulus with the goal to lower unemployment and to raise inflation.
The euro fell as the euro zone reported weakening growth, while the dollar touched a two-month high against the yen after Japan's finance minister said currency intervention was still a policy option.
The data showed the euro zone only just emerged from recession in the third quarter with growth of 0.1 percent, dragged down by a contraction in France.
The euro was down 0.08 percent at $1.3473 after climbing to a five-day peak of $1.3497 earlier.
The dollar rose 0.71 percent to 99.92 yen, buoyed by the comments from Japanese Finance Minister Taro Aso.
The benchmark 10-year U.S. Treasury note was up 13/32 in price to yield 2.7016 percent.
Brent crude oil rose above $108 a barrel on Yellen's comments and on a warning from the International Energy Agency (IEA) that prices are likely to rise.
U.S. crude fell, however, pressured by expectations of a rise in U.S. inventories.
Brent for December delivery was up $1.56 to $108.58 per barrel. U.S. crude rose 28 cents at $94.16 a barrel.
