LONDON, Oct 29 - Stocks rose in Europe and Asia on Wednesday, following a surge on Wall Street, and euro zone bond yields slid after the U.S. Federal Reserve kept interest rates on hold and signalled they would stay low for some time. The U.S. Nasdaq index scored its biggest daily gain since July on Tuesday and U.S. Treasury prices soared after the central bank, as expected, kept its key federal funds rate at a 45-year low of 1.00 percent. Wall Street's surge helped push European shares higher at the open. Japanese stocks rose for a fourth consecutive day on healthy earnings and after data showing Japan's industrial production rose more strongly than expected in September. The dollar, which initially strengthened against the euro after the Fed decision, scaled back its gains on Wednesday while the yen hit a three-year high on the greenback after the strong Japanese data. The Fed reiterated its view that policy could stay accommodative for "a considerable period" and said that, on balance, the biggest risk for the foreseeable future was of inflation becoming undesirably low. "There had been some speculation the Fed would change the balance of risks but, with asset markets still finely balanced, they decided to go for a steady approach," said Ian Stannard, currency strategist at BNP Paribas in London. "The Fed did not want to disturb asset markets at what is still a crucial juncture for recovery." Low rates to accelerate the nascent economic recovery should help company profits. The Nasdaq <.IXIC> rose 2.62 percent and the Dow Jones Industrial average <.DJI> rose 1.46 percent.
HVB, FRANCE TELECOM EARNINGS LIFT EUROPE
Strong earnings from German Bank HVB Group and France Telecom also boosted European shares. The FTSE Eurotop 300 index of pan-European blue chips was up 0.34 percent and the narrower DJ Euro STOXX 50 index <.STOXX50E> was up 0.27 percent. HVB returned to profit after four quarters in the red and France Telecom reported a 27 percent rise in third-quarter operating income. U.S. stock index futures were down, indicating Wall Street was set to open lower. In Tokyo, the Nikkei stock index closed 1.69 percent higher on a positive outlook for chip demand which lifted large-cap shares, healthy earnings from Hitachi <6501.T> and the industrial output data.The TOPIX index <.TOPX> rose 1.14 percent. Output rose 3.0 percent in September, compared with August, outstripping forecasts for a 1.5 percent increase. The strong output data, providing evidence of Japanese recovery, helped drive the yen through 108 to the dollar for the first time since November 2000. The euro was last at $1.1705, gaining nearly half a percent against the dollar. "There was some dollar buying on Monday and Tuesday on the basis that the Fed would be more optimistic on the outlook and maybe some of those positions have been lifted," said Derek Halpenny, currency economist at Bank of Tokyo-Mitsubishi. Euro zone government bond prices rose in the wake of the rally in Treasuries, driving yields lower. The two-year Schatz note was yielding 2.65 percent, down six basis points. The benchmark 10-year Bund yield was down 3.5 basis points at 4.28 percent. "The bond market and market participants in general strongly believe in the recovery story...so the sentiment in the bond market is still overall bearish and I don't think yesterday's statement is going to make much difference in the medium term," said Audrey Childe-Freeman, European economist at CIBC World Markets. U.S. Treasury yields were higher, however, as investors took profits after Monday's sharp price rises.//www./com