NEW YORK Mon Mar 31, 2014 12:12pm EDT
(Reuters) - Stocks in major markets rose for a fifth straight session on Monday while gold, the yen and other safety assets fell after Federal Reserve Chair Janet Yellen reinforced the need for "extraordinary" commitment to support the U.S. economy.
The euro continued to bounce back against the U.S. dollar even as softer-than-forecast inflation numbers added to the discussion of whether the European Central Bank will cut interest rates when it meets later this week.
The S&P 500 was setting up for a monthly gain, the 14th in the past 17 months. A winning quarter for the index would be the fifth straight, matching streaks seen in 2006-2007 and 2003-2004.
Yellen on Monday gave a strong defense for the Fed's easy-money policies in her first public speech since becoming the Fed's chief.
"I think this extraordinary commitment is still needed and will be for some time, and I believe that view is widely shared by my fellow policymakers at the Fed," Yellen said at a community reinvestment conference in Chicago.
Ken Polcari, director of the NYSE floor division at O'Neil Securities in New York, said: "I don't think (Yellen) is going to pull back on the taper, she is just being realistic.
"Her comments are just recognition that things continue to muddle along but I don't think she is changing the path at all, which is why the market is going to come under a little bit of pressure starting tomorrow," he added
Polcari said the end-of-quarter trading was also giving U.S. equities support.
The Dow Jones industrial average .DJI rose 103.53 points or 0.63 percent, to 16,426.59, the S&P 500 .SPX gained 12.46 points, or 0.67 percent, to 1,870.08, and the Nasdaq Composite .IXIC added 44.229 points, or 1.06 percent, to 4,199.988.
An index of European blue-chips .STOXX50E hit its highest intraday level in more than five years, and the FTSEurofirst 300 index of leading shares was up 0.3 percent .FTEU3.
Overnight in Asia, the MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.6 percent to close at its highest level this year on heightened speculation that Beijing will launch new spending measures and on reduced tensions out of Ukraine.
Tokyo's Nikkei stock average .N225 also rose, gaining 0.9 percent to touch a three-week high, supported by comments from Chinese Premier Li Keqiang on Friday that Beijing was ready to support the cooling economy, saying the government had the necessary policies in place and would push ahead with infrastructure investment.
INFLATION DATA AND THE ECB
The euro rose to a three-week high against the yen and edged up versus the dollar after hitting a one-month low to the greenback on Friday, even as inflation across the euro zone fell to the lowest level in over four years. The data initially supported expectations the ECB could act to counter the deflationary threat as early as this week.
Forex traders polled by Reuters, however, said the ECB will keep monetary policy unchanged when it meets on Thursday.
"The euro got trashed around the inflation numbers but then came roaring back," said Graham Davidson, a spot dealer at NAB in London.
"I think the market has probably priced in the story on the fall in inflation. The bottom line is that the economy is recovering and my hunch would be that the (ECB) does nothing."
The yield on 10-year U.S. Treasuries rose on Monday to as high as 2.7680 percent, trading within the top half of last week's range, while the yield on the 30-year bond briefly traded above 3.6 percent as U.S. stocks held to gains.
In emerging markets, the Turkish lira hit its highest level against the U.S. dollar this year after Prime Minister Tayyip Erdogan declared victory in local polls that had become a referendum on his rule.
The results stirred hopes that months of political turbulence would ease. The lira touched 2.1375, its strongest level against the greenback since late December.
Spot gold prices fell 0.4 percent and were trading near a six-week low hit Friday. U.S. crude oil futures dropped 0.6 percent after three days of gains and Brent fell 0.7 percent after four winning days.
(Reporting by Rodrigo Campos; additional reporting by Chuck Mikolajczak; Editing by Leslie Adler)