NEW YORK - Stocks across the world fought to extend their longest winning streak of the year on Wednesday, with a global index edging up as a boost from a dovish Federal Reserve more than offset concerns over U.S.-China trade talks.
In a major shift in its perspective, the Fed expects no rate hikes this year and only one in 2020, no longer anticipating the need to guard against inflation with restrictive monetary policy. The central bank also said it would stop reducing the size of its balance sheet by the end of September, sooner than expected.
But oil prices surged after a large draw in U.S. inventories surprised markets and sterling tumbled after Britain requested a shorter-than-expected delay for Brexit. Despite the pound's drop, the dollar index hit its lowest level since Feb 4.
Shares of chemicals group Bayer AG fell 9.6 percent in Frankfurt, their third-largest daily drop in a decade, after a second U.S. jury ruled its Roundup weed-killer caused cancer. In New York, FedEx fell 3.9 percent after it cut its 2019 profit forecast for the second time in three months.
The MSCI gauge of global stocks was up for an eighth straight session.
The Fed "came across as more dovish than what was expected. Wrapping up the balance sheet run-off by the end of September rather than the end of December was the biggest surprise," said Brian Jacobsen, senior investment strategist at Wells Fargo Asset Management.
Reports of renewed tension in U.S.-China trade talks weighed overnight on Asian stocks even before comments from U.S. President Donald Trump that his administration is talking about leaving tariffs on China for a long period of time.
China-U.S. trade talks are set to resume next week - the first since Trump delayed a March 1 deadline to raise tariffs on Chinese imports.
On Wall Street the Dow Jones Industrial Average fell 13.51 points, or 0.05 percent, to 25,873.87, the S&P 500 gained 4.34 points, or 0.15 percent, to 2,836.91 and the Nasdaq Composite added 34.70 points, or 0.45 percent, to 7,758.64.
The pan-European STOXX 600 index lost 0.90 percent and emerging market stocks rose 0.18 percent, supported by the weaker dollar.
MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.02 percent lower.
MSCI's gauge of stocks across the globe gained 0.16 percent.
In currency markets, sterling fell as much as 0.93 percent against the U.S. dollar after British Prime Minister Theresa May asked the EU to delay Brexit until June 30 - a shorter extension than some in the market had been expecting - and warned a no-deal Brexit was still possible.
The pound was last trading at $1.324, down 0.20 percent on the day.
But that was not enough to lift the dollar index after the dovish Fed statement. The dollar index fell 0.56 percent.
"The Fed exceeded markets' dovish expectations which took a toll on the greenback. The Fed did a big about-face on policy. The fact that the Fed threw in the towel on a 2019 rate hike was particularly dovish," said Joe Manibo, senior market analyst at Western Union Business Solutions in Washington.
The euro was up 0.75 percent to $1.1434, while the Japanese yen strengthened 0.56 percent versus the greenback at 110.78 per dollar.
U.S. crude prices rose to a four-month high after U.S. government data showed tightening oil and product supplies, but gains were capped by concerns over global economic growth amid the ongoing U.S.-China trade dispute.
U.S. crude rose 1.85 percent to $59.83 per barrel and Brent was last at $68.44, up 1.23 percent on the day.
Treasury yields fell after the Fed's statement.
"There’s one hike projected for 2020 but there’s a long time between now and then and so the market is effectively taking the view that the Fed is done tightening," said Evan Brown, head of macro asset allocation strategy at UBS Asset Management in New York.
Benchmark 10-year notes last rose 20/32 in price to yield 2.5423 percent, from 2.612 percent late on Tuesday.
The 30-year bond last rose 29/32 in price to yield 2.9801 percent, from 3.026 percent late on Tuesday.
Spot gold added 0.5 percent to $1,312.46 an ounce. Copper rose 0.50 percent to $6,491.50 a tonne. Palladium hit a record high of $1,608.005 per ounce on concern over tight supplies.