GLOBAL MARKETS-Asian stocks rally as Yellen backs Fed support for economy

Reuters

* Nikkei hits 6-month high, Asia ex-Japan shares off 6-weeklow

* Yellen:Fed has more work to do, jobless rate too high

* U.S. stocks at record high, U.S. bonds also supported

* Emerging market currencies, commodities benefit fromdovish Yellen

* German, UK shares seen up 0.7 pct, French shares 0.8 pct

By Hideyuki Sano

TOKYO, Nov 14 (Reuters) - Japanese stocks led a broad rallyin Asia on Thursday, spurred by Federal Reserve Vice Chair JanetYellen's comments which suggested global asset markets couldcount on the Fed's generous stimulus for some time.

Yellen, in remarks released ahead of her closely-watchedSenate confirmation hearing from 1500 GMT to succeed Fed chiefBen Bernanke, said the Fed has "more work to do" to help theeconomy.

European shares look set to carry the momentum seen in Asia,with France's CAC seen up as much as 0.8 percent andGermany's DAX and Britain's FTSE 0.7 percent.

"Yellen said the jobless rate is too high, and inflation istoo low. Nowhere in her comments one can find the context fortapering," said Norihiro Fujito, senior investment strategist atMitsubishi UFJ Morgan Stanley Securities.

Global markets have been buffeted since May when the Fedfirst suggested that the start of stimulus tapering wasn't faroff. Since then a run of mixed U.S. data has had marketsconstantly second-guessing the central bank's intentions, oftentriggering sharp moves in asset prices.

U.S. stock futures hit a record high followingYellen's comments, which came after regular U.S. trading hourson Wednesday that also saw major indexes scaling all-timehighs.

Japan's Nikkei jumped 2.1 percent to hit a six-monthhigh, also drawing support from data showing Japan's economicgrowth in the third quarter beat market expectations.

Growth of 0.5 percent in the July-September quarter toppedmarket expectations of 0.4 percent, marking the fourthsuccessive quarter of expansion - the best run for the world'sthird-largest economy in three years.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.0 percent, moving way from a six-weeklow hit on Wednesday.

Emerging market currencies, including those that took ahammering on Wednesday on concerns about imminent tapering ofthe Fed's stimulus, found some relief.

The Indonesian rupiah gained 0.6 percent to 11,535per dollar, recovering from 4 1/2-year low set on Wednesday.

The euro hit one-week high against the dollar, having erasedmost of the losses it had suffered after the European CentralBank's surprise rate cut a week ago.

The euro last held at $1.3476, after having risen toa high of $1.3499 earlier.

The dollar gained 0.4 percent against the yen to 99.60 yen near a two-month peak of 99.80 yen as rising riskappetite dented the safe-haven yen and erased the greenback'sinitial losses.

U.S. bond prices gained, pushing the 10-year notes yieldbelow 2.70 percent at one point. It last stood at 2.72 percent, flat from late U.S. levels but off an eight-weekhigh of 2.79 percent.

Bond prices could rise further if Yellen hints at keepinglow rates for longer.

Speculation is rife that Yellen may indicate she would liketo see the jobless rate fall to six percent or below beforeraising rates. The Fed's current threshold for the jobless rateis 6.5 percent.

"The bond market will be looking at her comments on forwardguidance. Bond yields, especially at the short end, will likelybe crushed," Makoto Noji, senior strategist at SMBC NikkoSecurities said.

Prospects of the Fed staying dovish for a longer periodsupported commodity and energy prices. Spot gold rose 0.6percent to $1,287 per ounce while silver rose 1.3 percent to $20.87.

Copper also gained 0.5 percent though the reboundcame after it had tumbled to a three-month low in heavy volumein the previous day -- in a possible sign of fragile globalgrowth.

Oil futures were weighed by data suggesting a rise in U.S.inventories last week, but stayed above recent lows on concernsover Libyan supply outages as strikes and protests disrupted thecountry's oil exports.

U.S. crude futures recovered to trade at $93.80 perbarrel, up slightly on the day but still not far from 41/2-month low of $92.86 set on Tuesday.

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