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June 29, 2017

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Asian stocks jump on Yellen easy-money remarks

TOKYO/HONG KONG--Global stocks were higher Wednesday after the new head of the U.S. Federal Reserve vowed a continuation of low interest rates. Stronger Chinese trade figures and the shelving of another U.S. debt limit battle also boosted markets.

Gains in Asia outpaced Europe where trading was more muted. Britain's FTSE 100 added 0.1 percent to 6,680.93 and France's CAC-40 rose 0.3 percent to 4,294.79. Germany's DAX climbed 0.5 percent to 9,522.13. Futures augured a higher open on Wall Street, with Dow and S&P 500 futures both up 0.1 percent.

Yellen's remarks worked to calm some of the jitters in global markets about slowing growth in China, the world's No. 2 economy.

"Basically, it's all about her comments," said Takuya Takahashi, strategist at Daiwa Securities Co. in Tokyo.

Asian markets climbed Wednesday after the new U.S. Federal Reserve chief said she would stick with its stimulus policy, while lawmakers agreed to raise the debt ceiling and avert another stand-off.

Wall Street rallied for a fourth straight session after Janet Yellen told Congress she expects to continue predecessor Ben Bernanke's plan to wind down its bond-buying gradually and keep interest rates low until the jobs market improves significantly.

Tokyo climbed 0.56 percent, or 81.72 points, to 14,800.06, Sydney jumped 1.06 percent, or 55.6 points, to close at 5,310.1 and Seoul added 0.20 percent, or 3.78 points, to 1,935.84.

Hong Kong jumped 1.47 percent, or 322.81 points to end at 22,285.79 and Shanghai added 0.30 percent, or 6.29 points, to 2,109.96.

Investors were buoyed by Chinese data showing a better-than-forecast jump in exports in January.

In her first testimony since taking the Fed chair on Feb. 1, Yellen said the world's number one economy is expected to grow this year and next at a moderate pace, despite some recent poor data that has sparked fears of a slowdown.

Investors were reassured by her comments following turmoil on global markets earlier this month.

The markets had feared a flight of capital from emerging economies, after the Fed's policy board said it would reduce its stimulus by US$10 billion a month beginning February to US$65 billion — following a similar move at its previous meeting.

Yellen said that when the Federal Open Market Committee meets again in March it could consider a pause to the taper if economic conditions show a significant deterioration.

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