* Yellen warns of waiting too long to raise rates
* Record-setting Wall Street sets tone
* Dollar on its best run since May 2012
By Jamie McGeever
LONDON, Feb 15 World stocks hit 21-month peaks
on Wednesday and the dollar rose for the 11th straight day,
after Federal Reserve Chair Janet Yellen flagged a possible
interest rate rise next month during upbeat comments on the U.S.
The dollar notched up its longest winning streak in almost
five years after Yellen said on Tuesday the Fed would probably
need to raise rates at an upcoming meeting and that delaying
could leave the central bank's policymaking committee behind the
Propelled by record highs on Wall Street, MSCI's benchmark
global equity index rose 0.25 percent to 442.4 points
, its highest since May 2015 and two points off
its record high. It has not fallen for six sessions, its longest
such run since last July.
Europe's index of leading 300 stocks rose 0.4
percent to 1,465 points, its highest since December 2015.
Germany's DAX and Britain's FTSE were both up
"At the margin, you could say that her (Yellen's) comments
were probably tilted slightly towards to the hawkish side given
her upbeat comments around the economic outlook," said Jim Reid,
markets strategist at Deutsche Bank.
Yellen's remarks helped push Wall Street by boosting U.S.
bank stocks. Goldman Sachs shares hit a record high, and
are up 37 percent since the U.S. presidential election on Nov.
Financials also led the way in Europe, with Credit Agricole
up more than 3 percent after France's biggest retail
bank beat forecasts with a smaller than expected earnings drop
in the fourth quarter.
MSCI's broadest index of Asia-Pacific shares outside Japan
was up 0.7 percent, rising to its highest since
July 2015. Japan's Nikkei added more than 1 percent,
buoyed by a weaker yen.
The dollar index against a basket of major currencies
chalked up its longest winning streak since May 2015. It was up
0.2 percent at 101.220, near a four-week high of 101.380
Yellen's remarks rekindled expectations in some quarters for
the Fed to raise rates three times in 2017 rather than twice.
The futures market did not share this view amid doubts about the
U.S. economy's ability to sustain three hikes.
According to CME Group's FedWatch data, U.S. interest rate
futures implied an around 30 percent chance of at least
three increases this year, little changed from the previous day
- though the chance rose above 40 percent immediately after
"That kind of rate re-think is dollar-friendly, but too
timid to derail the risk rally that starts in U.S. equities and
spreads into emerging market currencies," said Kit Juckes, head
of FX strategy at Societe Generale in London.
The greenback was a shade higher at 114.40 yen after
rising to a two-week high of 114.50 the previous day, while the
euro slipped to a one-month low of $1.05525.
The dollar was supported as U.S. Treasury yields rose on the
Fed Chair's comments, with the benchmark 10-year yield
climbing four basis points to an 11-day high of 2.50
percent the previous day. They were last at 2.475 percent.
The stronger dollar, which puts non-U.S. buyers of
dollar-denominated commodities at a disadvantage, weighed on
crude oil prices.
U.S. crude was down 0.5 percent at $52.91 a barrel
and Brent shed 0.4 percent to $55.75 a barrel. Crude
already came under pressure the previous day on evidence of
surging U.S. stockpiles.
Spot gold was off 0.15 percent at $1,225.91 an ounce.
Copper on the London Metal Exchange rose to $6,068 a
tonne but relinquished much of that rally to stand slightly
higher on the day at $6,036. The metal has enjoyed support
recently following a strike at the world's biggest copper mine
in Chile that took it to a 1-1/2-year high above $6,200 a tonne
(Reporting by Jamie McGeever; editing by John Stonestreet)