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Oil, healthcare boost stocks; dollar weak after minutes

By Chuck Mikolajczak

NEW YORK (Reuters) - Global equity markets posted solid gains on Wednesday, aided by a climb in oil prices and a surge in healthcare stocks, while the U.S. dollar hit a fresh 17-month low against the yen after the minutes from the latest Federal Reserve meeting.

Stocks on Wall Street and in Europe bounced from declines of more than 1 percent in the prior session, led by energy and healthcare sectors.

Pfizer (PFE.N) and Allergan (AGN.N) scrapped their $160 billion merger deal, fuelling speculation on where the two companies may look to for acquisitions. The healthcare sectors (.SPXHC) (.SXDP), were the top performing groups in both the United States and Europe, with each up more than 2 percent.

Federal Reserve policymakers debated last month whether an interest rate hike would be needed in April, though a consensus emerged that risks from a global economic slowdown warranted a cautious approach.

After the minutes traders added slightly to bets that the Fed will raise rates earlier than December, the timing that had been expected before the release.

"The minutes were a little more hawkish than the tone that we've heard from (Fed Chair Janet) Yellen post-FOMC meeting, but that was to be expected somewhat in my view," said Scott Smith, senior market analyst at Cambridge global Payments in Toronto.

The Dow Jones industrial average (.DJI) rose 112.73 points, or 0.64 percent, to 17,716.05, the S&P 500 (.SPX) gained 21.5 points, or 1.05 percent, to 2,066.67 and the Nasdaq Composite (.IXIC) added 76.78 points, or 1.59 percent, to 4,920.72.

MSCI's index of world shares rose 0.89 percent. The pan-European FTSEurofirst 300 share index (.FTEU3) closed up 0.76 percent after suffering its biggest drop in nearly a month on Tuesday.

The dollar continued to weaken against the yen after the Fed minutes, with earlier comments from Japanese Prime Minister Shinzo Abe that countries should avoid trying to weaken currencies with "arbitrary intervention" also weighing on the greenback.

The dollar was down 0.53 percent (JPY=) at 109.73 yen after hitting 109.31, its lowest since October 2014.

The dollar index (.DXY), which measures the greenback against a basket of six major currencies, was last down 0.16 percent at 94.477.

But as for much of the last year, oil continued to have an outsized influence on most of the market moves.

Crude prices extended their rebound. U.S. inventories unexpectedly fell from record highs last week as refineries continued to hike output and imports fell. Investors also gauged the possibility of an output freeze by producers.

Russian sources told Reuters that Russia believed $45 to $50 per barrel was an acceptable price for the oil market to re-balance and said there were now discussions on how long to freeze production and how to monitor it.

Brent crude futures (LCOc1) jumped 5.2 percent to settle at $39.84 per barrel, off a one-month low of $37.27 hit on Tuesday, while U.S. crude futures (CLc1) surged 5.18 percent to settle at $37.75, the biggest percentage gain since March 16.

In bond markets, U.S. Treasury yields reached session highs after the Fed minutes with the benchmark 10-year Treasury yield reaching a session high of 1.774 percent. It was last down 8/32 in price to yield 1.7549 percent.

(Additional reporting by Dion Rabouin; Editing by James Dalgleish and Meredith Mazzilli)