GLOBAL MARKETS-Stocks cheer dovish Fed, yen supported before BOJ decision

* Fed sees 2021 GDP growth of 6.5%, unemployment at 4.5%
* Fed says to keep rates low through all of 2023
* Equities surge on Fed's bullish view
* Yen perks up on report BOJ to allow bigger moves in yields

By Stanley White and Elizabeth Dilts Marshall
TOKYO/NEW YORK, March 18 (Reuters) - Asian shares and U.S.
stock futures rose on Thursday after the Federal Reserve
committed to maintaining accommodative monetary policy and
projected a rapid jump in U.S. economic growth this year as the
COVID-19 crisis eases.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.87%, while stocks in China .CSI300 rose
0.74%. Australia's market .AXJO bucked the trend and fell
0.73%.
E-mini futures for the S&P 500 EScv1 edged up by 0.7%.
Euro Stoxx 50 futures STXEc1 were up 0.52%, German DAX
futures FDXc1 rose 0.75%, and FTSE futures FFIc1 were up
0.4%, pointing to a bright start to European trading.
While inflation is expected to reach 2.4% this year, above
the central bank's 2% target, Fed Chair Jerome Powell called it
a temporary surge that will not change the Fed's pledge to keep
its benchmark overnight interest rate near zero.
Long-term Treasury yields remained elevated and the yield
curve steepened as bond investors chose to focus more on rising
inflation expectations.
The yen erased losses and government bond yields briefly
rose after a media report that the Bank of Japan will agree to
allow yields to trade in a wider band when it ends a two-day
policy meeting on Friday. "If the Fed isn't going to induce tightening, it's very
bullish for risky assets," said Teresa Kong, head of fixed
income and portfolio manager at Matthews Asia. "We should be
seeing a mild rally in Asian assets and currencies."
Shares in South Korea .KS11 and Singapore .STI also
jumped more than 1%, taking their lead from a strong session on
Wall Street.
The S&P 500 closed at a record high on Wednesday and the Dow
Jones Industrial Average closed above 33,000 points for the
first time, bolstered by the Fed's strong economic forecast and
Powell's comments that it is too early to discuss tapering-off
measures.
MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 0.35% to approach an all-time high.
The Fed projected the U.S. economy would grow by 6.5% this
year - the largest annual output growth since 1984 - thanks in
part to massive federal fiscal stimulus and optimism around the
success of coronavirus vaccines. "It's sort of shocking ... that officially the United States
government believes it will grow faster than the Chinese
government believes it will grow this year," said Christopher
Smart, chief global strategist at Barings Investment Institute
in Boston, calling it a "head-turning moment for investors."
The yen JPY=D3 erased losses and steadied at 108.94 per
dollar after the Nikkei newspaper said the BOJ will allow
10-year bonds to move up to 0.25% above or below zero, which is
slightly wider than the current band of 0.2%.
Japan's benchmark 10-year government bond yield
JP10YTN=JBTC briefly rose and futures 2JGBv1 fell, but the
focus shifts to the outcome of the BOJ's meeting on Friday.
The Australian dollar AUD=D3 jumped to a two-week high of
$0.7835 after data showed the nation's economy created more than
twice as many jobs as expected in February.
Benchmark 10-year U.S. Treasury yields US10YT=RR edged up
to 1.6639%, not far from the highest since January last year.
The spread between two-year and 10-year U.S. yields
US2US10=TWEB , the most-keenly monitored part of the yield
curve, rose to 155 basis points, which is the steepest since
September 2015.
The 10-year inflation breakeven rate hit 2.309%, which shows
that inflation expectations US10YTIP=RR are at the highest
since January 2014.
Oil futures extended declines, weighed down by rising U.S.
crude inventories and by expectations of weaker demand in
Europe, where the coronavirus vaccine roll out is faltering.
Brent crude LCOc1 fell 0.63% to $67.57 a barrel, and U.S.
crude CLc1 declined by 0.57% to $64.23. Spot gold XAU= rose 0.35% to $1,750.83 per ounce by 0119
GMT, while U.S. gold futures GCv1 climbed 1.1% to $1,745.80
per ounce as the Fed's pledge to keep rates low and worries
about inflation pushed up the precious metal.

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