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World stocks higher ahead of Yellen testimony

KUALA LUMPUR/HONG KONG--Global stocks were higher Tuesday as investors waited for the new Federal Reserve chief's testimony to Congress, which might give clues to how quickly the U.S. central bank will withdraw its economic stimulus.

In Europe, Britain's FTSE 100 rose 0.8 percent to 6,642.44 and Germany's DAX gained 1.1 percent to 9,388.34. The CAC-40 in France rose 0.8 percent to 4,269.34. Wall Street was set for gains, with Dow futures and S&P 500 futures both up 0.4 percent.

Investors will see Janet Yellen in the public spotlight for the first time as she testifies before Congress later Tuesday. Markets are waiting to see if she will consider a pause in cutting monetary stimulus because of weaker hiring by U.S. employers in the past few months.

The Labor Department reported that jobs created in January were far below market expectations, after a poor report in December. However, the unemployment rate has fallen to its lowest since late 2008 and some have dismissed the poor payrolls report as caused by a spell of severe cold weather.

“We expect questions on the pace of stimulus reduction as well as exit measures, but do not expect Yellen to say anything beyond what the Fed has already communicated,” Mizuho Bank said in a commentary. “Rather, we would focus on how upbeat or not her assessment of the U.S. economy is.”

Asia's markets edged up Tuesday, with investors sitting on the sidelines as they await the first testimony by the Federal Reserve's new head.

Janet Yellen, who took over as the bank's chair at the start of the month, will testify to a House of Representatives committee later in the day on the state of the economy and the course of monetary policy.

Sydney rose 0.62 percent, or 32.4 points, to close at 5,254.5 and Seoul added 0.46 percent, or 8.76 points, to 1,932.06.

Hong Kong jumped 1.78 percent, or 383.72 points, to 21,962.98 and Shanghai rose 0.84 percent, or 17.60 points, to 2,103.67.

Tokyo was closed for a public holiday.

The latest gains indicate traders' nerves may have settled after the turmoil seen earlier February when the Fed said it would further reduce its bond-buying scheme and U.S. and Chinese manufacturing data came in below forecast.

Markets brushed off a second straight set of poor jobs data Friday, with some blaming severe winter weather for the weak growth, while also pointing to positive news such as a rise in labor force participation.

Credit Agricole said investors would be keen to see if she maintains a doveish bias on the drawdown, against the backdrop of a more hawkish policymaking committee in the Fed.

“While we do not expect any major deviations from the Fed's current outlook, her interpretation of the recent softening in U.S. data will be an important driver for markets,” it said.

“Against this backdrop, the extent she views the recent soft patch in data as a function of weather-related effects (and other seasonal distortions) could support policy normalization,” it said.

Wall Street provided a positive lead for Asia. The Dow edged up 0.05 percent Monday, the S&P 500 gained 0.16 percent and the Nasdaq rose 0.54 percent.

In forex trade the euro ticked up to US$1.3659 and 139.69 yen compared with US$1.3642 and 139.46 yen in New York.

The dollar was at 102.25 yen against 102.18 yen.

Oil prices were mixed. New York's main futures contract, West Texas Intermediate for delivery in March, was down six cents to US$100.00 a barrel in afternoon trade. Brent North Sea crude for March delivery was up two cents to US$108.65.

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