(Adds close of U.S. markets)
* Yellen says 'high-pressure' policy may be needed
* U.S., Chinese data initially lift stocks, dollar
* Data bolsters notion Fed will hike rates in December
* Crude falls below $52 as abundant supplies weigh
By Herbert Lash
NEW YORK, Oct 14 Global stocks and the dollar
rebounded on Friday, buoyed at first by U.S. and Chinese data,
but Federal Reserve Chair Janet Yellen later rattled investors
when she said aggressive steps may be needed to address an
economy whose potential is slipping.
The dollar posted its largest weekly rise in more than seven
months, with rebounding U.S. retail sales and a rise in producer
prices last month indicating the economy had regained momentum
in the third quarter after a lackluster first-half.
Stocks in Europe rose more than 1 percent and an index of
global equities gained. But stocks on Wall Street pared gains to
close just above break-even, while yields on longer-dated U.S.
Treasuries ticked up, with the benchmark 10-year note edging
above 1.8 percent.
Yellen, who posed her comments in Boston as questions that
need more research, also suggested the U.S. central bank may
allow inflation to exceed its 2 percent target.
Yellen's remarks suggest she embraces the thinking of former
U.S. Treasury Secretary Larry Summers who has said secular
stagnation, or a lack of demand, is crimping global growth, said
Jeffrey Gundlach, chief executive of DoubleLine Capital.
"I didn't hear, 'We are going to tighten in December,'"
Gundlach told Reuters.
Peter Kenny, senior market strategist at Global Markets
Advisory Group in New York, said Yellen has kept everyone
guessing as to when the next rate hike will occur, which has led
to an inconsistent and trendless trading pattern in equities.
"If the markets have a fit, they're not going to hike. If
the markets are going to have smooth sailing until December,
'yes,' we'll hike," said Axel Merk, president and chief
investment officer of Merk Investments in Palo Alto, California.
"She's going to look for every excuse not to hike rates."
The Dow Jones industrial average closed up 39.44
points, or 0.22 percent, to 18,138.38. The S&P 500 rose
0.43 points, or 0.02 percent, to 2,132.98 and the Nasdaq
Composite added 0.83 points, or 0.02 percent, to
For the week, the Dow fell 0.56 percent, the S&P 500 slid
0.96 percent and the Nasdaq slipped 1.48 percent.
The dollar index, which tracks the greenback against a
basket of six major currencies, added 0.57 percent to 98.069
and was up 1.5 percent for the week.
Against the yen, the dollar rose 0.44 percent to 104.14
, while the euro fell 0.77 percent to $1.0971.
Chinese producer prices and U.S. economic data had bolstered
expectations earlier in the session that the Fed would raise
interest rates in December.
U.S. producer prices rose in September to post their biggest
year-on-year rise since December 2014, while retail sales gained
0.6 percent after a 0.2 percent decline in August.
In China, September producer prices unexpectedly rose for
the first time in nearly five years and consumer inflation also
beat expectations, easing some concerns about the health of the
world's second-biggest economy.
Disappointing Chinese trade data on Thursday had rattled
investors and pushed global equity markets to three-month lows.
European shares tracked Asian markets higher and Wall Street
initially jumped as strong results from JPMorgan and Citigroup
lifted financial stocks. Shares later pared gains.
Shares of JPMorgan, the biggest U.S. bank by assets,
fell 0.32 percent after it beat forecasts for revenue and
profit. Citigroup rose 0.29 percent after
earnings fell less than expected.
In Europe, the pan-regional FTSEurofirst 300 index
rose 1.33 percent to close at 1,341.54, while MSCI's all-country
world index of equity markets in 46 countries
rose 0.30 percent.
Oil slipped below $52 a barrel, giving up earlier gains, as
abundant crude supplies outweighed tighter U.S. fuel inventories
and plans by the Organization of the Petroleum Exporting
Countries to cut output.
Global benchmark Brent settled down 8 cents at
$51.95 a barrel. U.S. crude slid 9 cents to settle at
$50.35 a barrel.
U.S. Treasury yields rose, with the benchmark 10-year note
falling 19/32 in price to yield 1.8048 percent.
The benchmark 10-year German bund rose 2 basis
points to 0.05 percent.
(Reporting by Herbert Lash, additional reporting by Sam
Forgione in New York; Editing by Nick Zieminski)