April 26, 2012 / 3:09 AM / 7 years ago

Dollar dips on Fed comments, shares firmer

A man takes a photo of displays showing market prices at the Tokyo Stock Exchange in Tokyo April 11, 2012. REUTERS/Toru Hanai

LONDON (Reuters) - Global shares edged higher and the dollar hit a three-week low against a basket of currencies on Thursday after the Federal Reserve reaffirmed its willingness to help if the U.S. economy weakened, though it raised its growth outlook slightly.

Strong corporate profits emerging from the United States and Europe and a dip in oil prices also supported investor confidence, but markets remain cautious ahead of a key test of demand for euro zone debt on Friday when Italy will sell new bonds.

“Despite its projections that GDP growth will pick up, the FOMC expects unemployment to remain well above target by the end of 2014. This means that there is scope for further monetary easing down the road, especially if the recovery falters,” said Philip Marey, strategist at Rabobank.

The dollar index edged down to 78.96 after Fed Chairman Ben Bernanke’s comments, with the U.S. unit suffering more against higher yielding currencies. It hit a seven-month low against the Canadian dollar and sterling.

The euro was up 0.1 percent at $1.3233, near a three-week high of $1.3237 touched on Wednesday.

The Fed’s reassuring words lifted share markets in Asia and the United States, pushing the MSCI world equity index up 0.2 percent to 326.86, making its gains for the year over 9 percent.

European equities were supported by a crop of strong corporate earnings, but political uncertainty in the region and a mixed performance in the financial sector kept a lid on gains. The FTSEurofirst 300 was up 0.1 percent at 1,043.24 in early trade.

Reporting by Richard Hubbard; Editing by Will Waterman

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