World stocks hit their highest in five weeks on Tuesday as a dovish tone from Janet Yellen cooled near-term US rate hike bets and a seven-month peek in crude prices cheered oil firms.

European stocks were up 1 per cent in early trading after Wall Street's S&P 500 had hit a seven-month high on Monday and Asia gained 1.5 per cent overnight.

Jobs report

It came after the Fed chief Yellen had called last week’s US jobs numbers disappointing and opted not to repeat her recent message that US interest rates could rise again in the coming months.

That was balanced however, by her cautioning against attaching too much significance to the payrolls data in isolation and as she pointed to other more upbeat signals for the world’s largest economy.

“Yellen has certainly put pay to a rate rise in June but there's more going on here than that,” said Aberdeen Asset Management's Luke Bartholomew.

“Her message really is that the US is making consistent progress towards full-employment, that inflation should pick up and there’s more positives than negatives. This should give those hoping for a July rate rise some modicum of solace.”

US Treasury yields

With the Fed suggesting it was in no rush to increase interest rates, bond yields slipped with 10-year US Treasury yields retreating to 1.74 per cent from 1.84 per cent last week. Benchmark yields are down 63 basis points so far this year.

European bonds barely moved in early trading with German Bunds already near all-time lows thanks to the European Central Bank’s unprecedented stimulus efforts.

In the FX markets, Yellen’s comments also kept the dollar pinned near a one-month low against other top currencies.

RBA policy stance

The Australian dollar meanwhile jumped 1 per cent after the Reserve Bank of Australia appeared to raise the bar for further rate cuts. Sterling also climbed 0.7 per cent to $1.4524 as jostling continued over the UK’s June 23 vote on its European Union membership.

Earlier on Tuesday, Japanese Finance Minister Taro Aso told reporters that he would refrain from commenting on Japan’s possible response in the currency market if the yen were to rise further.

Aso declined to comment on US Treasury Secretary Jack Lew’s remark over the weekend that described recent currency market moves as “orderly” in a sign of caution towards currency intervention.

Fifty shades

Elsewhere, Brent oil prices held firmly above the psychological $50 a barrel mark after crippling attacks on Nigeria’s oil industry and data showing fresh draw downs in US crude stockpiles.

Global crude benchmark futures, which have now surged more than 50 per cent this year, hit a seven-month high of $50.83 per barrel on Monday before easing to $50.46 early on Tuesday.

US West Texas Intermediate (WTI) crude stood firm at $49.60 per barrel, after rising 2.2 per cent on Monday, its largest gain in three weeks.

Nigeria’s Bonny Light crude output is down by an estimated 170,000 barrels per day (bpd) following attacks on pipeline infrastructure, according to one Reuters industry source.

LME copper

Metals markets were a touch lower too but have also been signalling lately that the worst of the commodities rout may be over.

Three-month copper on the London Metal Exchange had slipped 0.7 per cent to $4,656.50 a tonne after it had hit its highest in four weeks, while zinc, another key industry metal, was at its highest in almost a year.

“This week’s rally continues to be supported by a weaker USD and falling inventories. However, investors will remain cautious leading into the release of China’s trade data tomorrow,” ANZ said in a note.

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