The dollar struggled near one-month lows against the other major currencies on Thursday after the Federal Reserve sounded more cautious about the future pace of rate hikes, while the euro hit five-week highs on relief over Dutch election results.
The S&P 500 Index jumped by the most in two weeks while Australian and New Zealand shares climbed.
London scored slender gains as official data showed the unemployment rate had struck a 41-year low, but Frankfurt and Paris wiped out their opening gains.
Yields on 10-year U.S. Treasuries nursed their heaviest falls since last August. The euro rose to a one-month high after Dutch Prime Minister Mark Rutte's Liberals easily beat the anti-Islam Freedom Party of Geert Wilders.
Market participants will be watching for whether the Fed will signal an even faster pace of monetary tightening this year than the three rate hikes it projected in December. Those trades unwound late Wednesday in the U.S.as the Fed indicated it hasn't fallen behind with its efforts to keep inflation in check.
Hours after the Fed's rate hike, China's central bank on Thursday raised short-term interest rates for the third time in as many months, a day after the end of the annual session of parliament where leaders warned that tackling debt risks would be a top policy priority this year.
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The euro has lost about 4% of its value against the dollar since October, when markets started betting on tighter monetary policy in the U.S. This is a sign that the Fed's decisions are likely to keep driving the single currency, because policy makers at the European Central Bank are unlikely to follow suit in the near term. The Swiss National Bank kept its deposit rate at an historic low and reaffirmed its threat to intervene to keep a lid on the franc.
Following last year's shock Brexit referendum and Donald Trump's surprise victory in the USA presidential polls, the Dutch vote is seen as a litmus test of the strength of far-right and populist parties ahead of crucial elections in France and Germany later this year. He's said he'll seek a $54 billion boost in defense spending, paid for by an equal amount of cuts to non-defense agencies. Sterling, which may be at the heart of the bank's concern over inflation and would benefit from any rise in interest rates, jumped by a full cent to $1.2361 and by more than half a percent to 86.83 pence per euro.
Between February 16, 2017, and March 8, 2017, the US Dollar Index rose almost 1.6%. The shared currency on Thursday bought $1.0736, little-changed from late Wednesday in NY. The Stoxx Europe 600 Index added 0.4 percent.
US gold futures for April delivery settled up 2.2 percent at $1,227.10.
WTI crude oil extended its gain, rising 0.5 percent to $49.11 a barrel after surging 2.4 percent Wednesday, its first advance in eight days.