European stocks advanced for a second day Wednesday after Federal Reserve Chair Janet Yellen reiterated that interest rates will be raised gradually in light of uncertain global growth.
The Stoxx Europe 600 Index climbed 1.1 percent at 9:34 a.m. in London. The equity gauge ended Tuesday up 0.5 percent, after swinging between gains and losses as commodity-related stocks retreated. Before yesterday’s advance, the benchmark had fallen for four consecutive sessions, signaling a loss of momentum in the rebound that more than halved its 2016 decline. It is still on course for a 2 percent gain in March, its first monthly rise since November, paring its loss for the year to 6.9 percent from as much as 17 percent.
“Janet Yellen slapped down all the hawkish rhetoric that came out of the Fed in the wake of the last meeting,” said Michael Hewson, the London-based market analyst at CMC Markets Plc. “A weaker dollar, the markets are less worried about a rate rise in April, and the prospects of a potential rate rise in June have also receded ever so slightly as well, and that generally is giving markets a significant boost.”
In a speech to the Economic Club of New York, Yellen said it is appropriate for U.S. central bankers to “proceed cautiously” in raising rates. Her comments reassured investors speculating on the pace of increases after recent data, including stronger-than-forecast economic growth and consumer confidence, boosted the case for a hike. Traders have cut the odds of an April rate rise to zero, with the probability of a move in June down to 28 percent.
Commodity-related shares posted the biggest gain of the 19 industry groups on the Stoxx 600, with Anglo American Plc and Glencore Plc rising more than 6 percent. Energy companies rebounded as oil recovered.
Among stocks moving on corporate news, Metro AG jumped 9.3 percent after the German retailer said it’s preparing to split in two in a move aimed at boosting its value.