NEW YORK, May 21 — World stock markets rose while US bond yields edged higher today on views the Federal Reserve could raise interest rates more slowly than expected.

The euro declined for a second straight session against the dollar on expectations of further easing from the European Central Bank.

Minutes from the Fed’s last meeting, due later today, could shed light on the timing of rate rises. Fed Chair Janet Yellen said in March the US central bank could raise rates six months after its bond-buying programme ended.

“There’s a concern that rates will rise much more slowly than the market is anticipating,” said Sean Murphy, Treasuries trader at Societe Generale in New York.

Adding to that view, New York Federal Reserve President William Dudley yesterday said the Fed would likely be “relatively slow” in hiking rates.

“I suspect they are going to continue this low interest rate environment, very accommodative monetary policy, for a very long period of time in an effort to help markets feel a little bit calmer ...,” said Joseph Tanious, global market strategist at J.P. Morgan Asset Management.

Later today, Yellen makes a commencement address in New York.

MSCI’s all-world equity index, which tracks shares in 45 nations, was up 0.4 per cent, while European shares were up 0.6 per cent.

On Wall Street, the Dow Jones industrial average rose 125.19 points or 0.76 per cent, to 16,499.5, the S&P 500 gained 10.79 points or 0.58 per cent, to 1,883.62 and the Nasdaq Composite added 24.77 points or 0.6 per cent, to 4,121.66.

In the foreign exchange market, the dollar fell to a 3½-month low against the yen on comments from Bank of Japan Governor Haruhiko Kuroda, who gave no hint of further monetary easing in the near term.

The dollar fell to ¥100.805 in London trading, but recovered in New York trading to trade higher at ¥101.54.

In mid-morning New York trading, the euro fell to one-week lows against the dollar of US$1.3652 and was last at US$1.3661, down 0.3 per cent on the day.

Benchmark 10-year Treasury notes were last down 10/32 in price to yield 2.54 per cent, from 2.509 per cent late yesterday.

Oil rises

Oil rose to US$110 a barrel, supported by an industry report showing US crude inventories had unexpectedly fallen last week and by persistent disruption to Libya’s output amid renewed fighting.

Brent crude gained 38 cents to US$110.07 a barrel, while US crude rose 82 cents at US$103.15. — Reuters