By Herbert Lash
NEW YORK (Reuters) - Global equity markets advanced broadly on Wednesday after China reported growth that beat expectations, providing relief to investors worried about the Chinese economy, while the dollar eased on the growing view the Federal Reserve will keep interest rates lower than normal for a few years.
Fed Chair Janet Yellen told the Economic Club of New York that the U.S. economy appeared to be slowly moving toward full employment, but that it would need help from the central bank for some time to come.
Yellen said that achieving the Fed's economic goals "will likely require low real interest rates for some time," a policy view she said was shared broadly across many advanced economies.
Wall Street rallied for a third straight day, and the three major stock gauges climbed 1 percent or more.
China's economy grew 7.4 percent in the first quarter from a year earlier, topping forecasts of 7.3 percent. There had been speculation that growth would be closer to 7 percent after a string of recent soft numbers.
Relief rippled through Asian markets, then spread to Europe and Wall Street. Japan's Nikkei ended up 3 percent, its biggest gain since February.
MSCI's all-country world index rose 1.02 percent, while the FTSEurofirst 300 index of leading European shares closed up 1.2 percent at 1,322.51 points. Yet many traders pegged the gain as a technical rebound after a 1 percent decline in the previous session.
Earlier this month, the European index hit a near six-year high, a rally that has been halted by worries over the crisis in Ukraine as well as worries about China, the world's second biggest economy.
"There is a lot of concern about Chinese growth this year, so there is some relief in the GDP number," said Jim Russell, senior investment strategist at U.S. Bank Wealth Management in Cincinnati. "We think that is influencing the market today."
On Wall Street, the Dow Jones industrial average rose 162.29 points, or 1 percent, to 16,424.85. The S&P 500 gained 19.33 points, or 1.05 percent, to 1,862.31, and the Nasdaq Composite added 52.064 points, or 1.29 percent, to 4,086.225.
Yahoo was the leading percentage gainer on the S&P 500 as investors focused on the company's 24 percent stake in Chinese internet company Alibaba Group Holding Inc, which reported a surge in quarterly revenue growth in the last quarter of 2013. Yahoo shares jumped 6.26 percent to $36.35.
Google Inc, after the market close, reported its Internet business revenue grew 19 percent in the first quarter, falling short of Wall Street targets as the price of its online ads continued to decline.
Shares of Google were down 5.8 percent at $524.40 in after-hours trading.
International Business Machines Corp reported lower-than-expected quarterly revenue as weakness in its storage and server businesses continued to offset gains in its software services. IBM shares fell about 4 percent to $188.40 in after-hours trade.
In U.S. economic news, industrial production rose at a faster-than-expected clip in March, the latest sign the economy was gaining momentum.
Groundbreaking for new homes also increased but remained well below the post-recession peak hit in November, signaling the drag the housing market is placing on the economy.
The euro rose 0.01 percent to $1.3813. There were also more bond gains for former trouble spots Italy, Spain, Portugal and Greece.
The 10-year U.S. Treasury note slipped 1/32 of a point in price, boosting its yield to 2.6337 percent, as the growth in China reduced demand for safe-haven government bonds.
But mounting risks in Ukraine after Russia declared the country to be on the brink of civil war and Kiev said an "anti-terrorist operation" against pro-Moscow separatists was under way helped drive up oil prices.
Ukrainian government forces and pro-Russian rebels staged rival shows of force in eastern Ukraine on Wednesday, though hopes remained that talks in Switzerland on Thursday between Ukraine, Russia, the United States and the European Union could cool the situation.
Global oil prices rose close to $110 a barrel but gave up some gains after an unexpectedly large build in crude stocks in the United States, the world's largest consumer of oil.
Brent crude for June delivery rose by a dollar earlier in the session but pared gains to settle up 24 cents at $109.60 a barrel.
U.S. crude for May delivery also rose more than $1 before paring gains immediately after closely watched data form the U.S. Energy Information Administration was released. U.S. crude settled 1 cent higher at $103.76 a barrel.
Crude oil stocks rose 10 million barrels to 394 million barrels in the week ending April 11, according to the EIA data, far more than the 2.3 million-barrel build expected by analysts.
(Additional reporting by Marc Jones in London; Editing by Meredith Mazzilli, Leslie Adler and Jonathan Oatis)