By Chibuike Oguh
NEW YORK, Sept 17 (Reuters) - Global shares rose and Treasury yields fell on Thursday as investors assessed the US Federal Reserve's interest rate increase and its efforts to contain inflation.
Markets were also weighing the Bank of England's decision to leave interest rates unchanged while signaling further policy tightening could be needed as higher oil prices add to inflation pressures. The Bank of Japan is widely expected to lift interest rates on Friday.
Stocks fell on Wednesday
as investors digested the Fed's hawkish stance and Chair Kevin Warsh's press conference, but much of that move was being unwound on Thursday, supporting equities, said James St. Aubin, chief investment officer at Ocean Park Asset Management.
"The big kicker from the equity market perspective is that the hawkish tone was a bit more than what they were expecting and now we are settling in and investors are starting to say, 'well, maybe that was more talk than anything'. If you think about the backdrop from a fundamental perspective, it's still very strong and that's providing the overriding sense of optimism right now," St. Aubin said.
On Wall Street, all three major indexes were higher and on track to break a three-session losing streak.
Technology, consumer discretionary and materials stocks led gains, while consumer staples, financials and energy lagged. The Dow Jones Industrial Average rose 0.52%, the S&P 500 rose 0.96%, and the Nasdaq Composite rose 1.48%. European shares gained nearly 1%. MSCI's broadest index of Asia-Pacific shares outside Japan edged higher by 0.07% overnight.
MSCI's gauge of stocks across the globe rose 0.73% and was poised to snap three straight sessions of losses.
DOLLAR EASES
The Fed's unanimous quarter-point rate increase on Wednesday was accompanied by its closely watched "dot plot", which signaled one additional rate hike this year.
The dollar took a breather against major peers after hitting a seven-week high in currency markets as US Treasury yields retreated following Wednesday's rise.
The euro was up 0.17% against the dollar at $1.1483 while the Japanese yen strengthened 0.35% against the greenback to 155.74 per dollar.
Sterling fell 0.19% to $1.3356 after the BoE decision, its lowest level in seven weeks against the dollar.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.1%.
In Treasury markets, bond yields pulled back from recent highs. The yield on benchmark US 10-year notes fell 5.53 basis points to 4.949%.
The yield on the benchmark German 10-year Bunds fell 0.26 basis points to 3.476%. The British 10-year gilt yield fell 7.65 basis points to 5.226%.
OIL SLIPS
Brent crude futures dropped 2.1% to $103.70 a barrel overnight following reports Saudi Arabia was offering crude cargoes through Oman.
That helped ease some of the concerns about Middle East supply disruption, following a recent escalation of the seven-month war after attacks by Iran-backed Houthi fighters on Saudi cities. [O/R]
Spot gold rose 2.34% to $4,361.71 an ounce.
(Reporting by Chibuike Oguh in New York; Editing by Nia Williams)
