TOKYO (Reuters) - Asian stocks rose on Wednesday thanks to gains on Wall Street after Federal Reserve Chair Janet Yellen suggested the Fed would not rush into raising interest rates, a reassuring signal for investors worried about a deteriorating global outlook.
The euro, meanwhile, was bolstered against the dollar on news that euro zone partners had approved Greece's reform plan, a requirement for the cash-strapped nation to receive a four-month extension to its bailout.
In remarks to the Senate Banking Committee, Yellen said the U.S. central bank was preparing to consider interest rate hikes "on a meeting-by-meeting basis."
That was a subtle change of emphasis in how the Fed has been speaking about its plans, as it suggests a hike could still come as early as June but a later date for a rate increase is possible against the backdrop of weak U.S. inflation and a sluggish global economy.
MSCI's broadest index of Asia-Pacific shares outside Japan was up about 0.3 per cent in early trade, while Japan's Nikkei stock average was off 0.1 per cent after closing at a fresh 15-year high in the previous session.
U.S. stocks closed higher on Tuesday, with the Dow Jones industrial average and the S&P 500 hitting records as many investors took the Fed's subtle change in emphasis to mean that higher rates were not on the immediate horizon.
A backdrop of weakening global growth has also kept investors on the edge about the Fed's plans, with some worrying a premature start to the U.S. rate hike cycle could dent momentum in the U.S. economy.
The dovish interpretation was far from unanimous, however, and others left their predictions intact.
"In sum, we retain our view that the Fed will raise rates beginning in June, with risks to a later take-off should core inflation or measures of inflation expectations drift lower," strategists at Barclays wrote in a note to clients.
U.S. data on Tuesday painted a mixed picture. Home prices and the services sector supported the view of an ongoing U.S. expansion, but a measure of consumer confidence fell.
Because Yellen gave no sign of an imminent rate increase, investors piled back into U.S. Treasuries, sending two-year yields to 2-1/2-week lows and reducing the appeal of the dollar.
The US dollar initially rose to a two-week high of 119.84 yen after Yellen's comments, before those gains unravelled. It was down about 0.2 per cent in early Asian trading at 118.79 yen.
The dovish interpretation of Yellen's remarks as well as the Greek developments helped the euro rise off a Tuesday session low of US$1.1288. It was up about 0.1 per cent on the day at $1.1345, but edged down about 0.1 per cent against the yen to 134.78.
Crude oil came under pressure as expectations that this week's reports will show U.S. crude inventories rose again countered supportive news of Libyan oilfields being shut.
Brent slipped about 0.3 per cent to US$58.75 a barrel, while U.S. crude shed about 0.1 per cent to US$49.24.
Spot gold added about 0.4 per cent on the day to $1,203.80 per ounce after it plumbed a seven-week low on Tuesday, before rebounding as the U.S. dollar weakened after Yellen's testimony.
