Stocks gained broadly on Tuesday, helped by buoyant oil prices, a day after Federal Reserve Chair Janet Yellen pushed back expectations for an interest rate increase without raising concerns over the strength of the world's largest economy.

Crude oil futures traded above the psychologically important $50 mark, touching a 2016 high, supported by a weaker US dollar, which wallowed near a four-week low.

The MSCI world equity index, which tracks shares in 45 nations, rose to the highest in more than six weeks.

“It's all related. Oil is moving higher on the diminished threat of higher rates,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

Higher interest rates boost the US dollar, which in turn hurts dollar-denominated commodity prices.

Worries over potential supply shortages from attacks on Nigeria's oil industry helped boost oil prices, as did expectations of a likely drop in US crude stocks, a third decline in as many weeks.

“With the industry projecting a decline in total US crude oil stocks in this week's reports, the market bears are remaining on the sidelines,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

Prices of oil have nearly doubled since January, boosted largely by a spate of unplanned outages that have eroded production in Canada, Venezuela, Libya and Nigeria, along with a steady decline in higher-cost U.S. shale output.

Strength in energy shares pushed the S&P 500 index to within 16 points of its record high, while the Dow Jones industrial average climbed above 18,000 for the first time since April. Chevron rose 2.5 per cent and Exxon gained as much as 1.8 per cent to a 52-week high of $90.91.

The Dow Jones industrial average rose 17.95 points, or 0.1 per cent, to close at 17,938.28, the S&P 500 gained 2.72 points, or 0.13 per cent, to 2,112.13, while the Nasdaq Composite dropped 6.96 points, or 0.14 per cent, to 4,961.75.

Europe's broad FTSEurofirst 300 index closed up 1.19 per cent at 1,360.25, taking cues from Yellen's remarks on Monday and helped by improving sentiment due to the firmer oil prices.

The MSCI world equity index was up 0.61 per cent, its fourth session of gains.

In the currency market, the Australian dollar was the biggest gainer among major currencies after the Reserve Bank of Australia kept interest rates on hold and hinted it was in no hurry to ease monetary policy further on signs of reasonably strong economic growth.

The US dollar hovered near four-week lows against a basket of currencies as traders speculated when the Fed may next raise interest rates. The dollar index was last down 0.02 per cent at 93.887.

In the bond market, US Treasury prices rose, boosted by expectations the Fed will not raise interest rates for several months. But they briefly pared gains after the government had to pay more to sell new notes.

The Treasury sold $24 billion in three-year notes at a high yield of 0.93 per cent, around half a basis point above where the notes had traded before the auction.

Benchmark 10-year notes gained 3/32 in price to yield 1.713 per cent, down from 1.723 per cent late on Monday. The yields have risen from two-month lows of 1.697 per cent hit on Friday.

Brent crude settled up 89 cents, or 1.76 per cent at $51.44 a barrel, while US crude settled up 67 cents, or 1.35 per cent, at $50.36.

Gold eased as investors turned cautious after the metal failed to sustain a recent rally. Spot gold prices were down 0.1 per cent to $1,243.57 an ounce, still near a 2-week high.

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