By Herbert Lash
NEW YORK(Reuters) - A leading global stock index hit an all-time high and the dollar eased on Thursday, a day after the Federal Reserve lowered its forecast for target U.S. interest rates in the long term, an outlook that lifted risk appetite around the world.
Wall Street rebounded just before the close, with the S&P 500 again setting a record closing high, a day after the Fed expressed confidence that the U.S. economic recovery was on track.
Stocks in Europe rose to six-year highs and equities in Asia posted strong gains, while U.S. Treasuries yields fell to two-week lows on the Fed's more dovish tone at the close of its two-day meeting on Wednesday. Yields later rebounded.
The dollar sank to three-week lows as many traders had expected the Fed to take a more hawkish stance because of recent signs of a pick-up in price pressure.
Steven Einhorn, vice chairman of hedge fund Omega Advisors Inc, said the bull market in U.S. equities is not over and that the S&P 500 will rise another 3 to 5 percent by year-end.
"There is still a good deal of time and price left in it, though I would say that given the advance we have made year-to-date, that the upside between now and year-end is respectable but not anything other than respectable," Einhorn told Reuters.
MSCI's all-country world index, which includes about 85 percent of global investable equities, rose 0.6 percent to pass an all-time high set in November 2007.
In Europe, the FTSEurofirst 300 index of regional shares rose 0.59 percent to close at 1,395.58 after touching a six-year high.
The Dow Jones industrial average rose 14.84 points, or 0.09 percent, to 16,921.46. The S&P 500 gained 2.5 points, or 0.13 percent, to 1,959.48 and the Nasdaq Composite dropped 3.51 points, or 0.08 percent, to 4,359.326.
U.S. Treasuries prices retreated after the government had to pay more to sell $7 billion in new inflation-protected 30-year debt and investors reworked positions after the Fed meeting.
Benchmark 10-year notes fell 3/32 in price to yield 2.6278 percent.
The greenback touched a three-week low against a basket of currencies at 80.147. The euro strengthened to a 10-day high against the dollar while sterling advanced to its highest versus the greenback since October 2008.
The euro gained 0.07 percent to $1.3604, while the dollar rebounded against the yen, rising 0.03 percent to 101.94 yen.
Brent crude hit a nine-month high above $115 a barrel on concerns heavy fighting in Iraq could limit oil supply from OPEC's second-biggest producer.
Brent rose 80 cents to settle at $115.06 a barrel. The U.S. crude oil futures contract for July, which expires on Friday, rose 46 cents to settle at $106.43 a barrel.
(Reporting by Herbert Lash; Additional reporting by Jamie McGeever in London; Editing by Meredith Mazzilli, Chizu Nomiyama, Leslie Adler and James Dalgleish)