Global stocks rise as US, Japan central banks stay dovish

New York - Global stocks got a boost on Wednesday after the Bank of Japan overhauled its stimulus program and the Federal Reserve kept interest rates low.

Among major bourses, equity advances were strongest in Tokyo and New York, with the Nasdaq surging 1% to a fresh all-time high. Gains were more modest in Europe.

The gains showed that the market could still be lifted further by central banks even as concerns rise about the limits of monetary policy to spur economic growth.

"It's continued accommodation from the world's central banks," said Jack Ablin, chief investment officer of BMO Private Bank. "These central bank governors don't want to upset investment risk-taking."

After a hotly anticipated meeting, the Bank of Japan (BoJ) said it would set a target for 10-year government bond yields to try to push inflation higher, while delaying a further cut in interest rates into negative territory.

The BoJ also loosened its annual asset-buying target - a key feature of its more than three-year-old policy - saying the target could instead fluctuate to give it flexibility while focusing on keeping bond yields steady.

Yields on 10-year government bonds briefly broke into positive territory on the news before falling back.

The Fed, meanwhile, kept its benchmark interest rate unchanged for the sixth straight meeting, saying it needs to see a bit more sign of strength in the US economy.

However, Fed Chair Janet Yellen said the economy continues to broadly show progress. Fed officials indicated they foresee one rate hike before the end of the year.

"What's nice here is that the Fed didn't hike interest rates, yet they still have confidence in the economy," said Gregori Volokhine of Meeschaert Capital Markets. "That's what is pushing the market higher."

 New Nasdaq record

US stocks jumped about one percent, with the Nasdaq finishing at a new all-time high of 5 295.18, up about 12 points from the previous record on September 7.

Tokyo's Nikkei stocks ended up 1.9% higher.

In Europe, London's benchmark FTSE 100 index managed a 0.1% gain after the Organization for Economic Cooperation and Development slashed its growth forecast for Britain owing to the Brexit vote.

Frankfurt's DAX 30 added 0.4% and the CAC 40 in Paris rose 0.5%.

Japanese bank shares surged on the BoJ's decision not to push further into negative rates. Mitsubishi UFJ Financial Group soared 7.4%, Mizuho Financial Group 6.8% and Mitsui Financial Group 7.3%.

Most European banks also rose, with Commerzbank climbing 3.3%, BNP Paribas 2.8% and Societe Generale 1.9%.

Jasper Lawler, analyst at CMC Markets, said the BoJ appeared to be seeking to "engineer a profitable environment for banks," suggesting a pathway for the European Central Bank at a time when investors also worry about the profitability of European banks.