* Dollar falls hard as Fed scales back rate hike
expectations
* World shares hit highest since start of year
* Exporters hit by higher euro, yen
* Emerging market shares jump more than 3 percent
(Updates prices)
By Rodrigo Campos
NEW YORK, March 17 (Reuters) - The U.S. dollar index dropped
to a five-month low on Thursday while shares on Wall Street
rallied to lead global equities higher as a dovish U.S. Federal
Reserve emboldened investors to take on more risk.
The S&P 500 briefly turned positive for the year and closed
at its highest since Dec. 31, led by the materials and energy
sectors. The Dow industrials .DJI ended above its 2015 closing
level for the first time this year.
Traders continued to digest the previous day's statement and
projections from the Fed, which scaled down to two its
expectations of the number of U.S. rate hikes likely over the
next nine months. It previously estimated four hikes through
2016.
As the dollar declined, commodity prices rose to their
highest since December .TRJCRB , as did stocks across emerging
markets .MSCIEF . Stocks in geographies and sectors heavily
reliant on manufactured exports, like Japan .N225 and European
automakers, fell.
"It's a continued reaction from the Fed's move yesterday,"
said David Lefkowitz, senior equity strategist at UBS Wealth
Management Americas in New York. "It's a pretty equity-friendly
backdrop."
The Fed on Wednesday pointed to moderate U.S. economic
growth and strong job gains while remaining cautious about risks
from an uncertain global economy.
The Dow Jones industrial average .DJI rose 155.73 points,
or 0.9 percent, to end at 17,481.49, the S&P 500 .SPX gained
13.37 points, or 0.66 percent, to 2,040.59 and the Nasdaq
Composite .IXIC added 11.02 points, or 0.23 percent, to
4,774.99.
Despite Europe's .FTEU3 0.1 percent decline, MSCI's gauge
of shares in developed markets .MIWD00000PUS climbed 1.5
percent on the day to close at its highest since Dec. 31.
A more than 3 percent surge catapulted emerging market
stocks .MSCIEF to their highest since December. Stocks in
Brazil .BVSP rose 6.6 percent, the most for any day since
early January 2009.
The jump in the yen, however, meant Japan's Nikkei .N225
lost out, and it closed down 0.2 percent. Dollar-denominated
Nikkei futures NKc1 fell 0.8 percent.
A MATERIALS WORLD
The weaker U.S. currency boosted dollar-denominated
commodities. Copper prices CMCU3 hit their highest since
November, and were last up more than 2.7 percent.
Brent oil LCOc1 jumped 2.7 percent to $41.41 as a number
of large producers agreed on a date to discuss an output freeze.
U.S. crude CLc1 rose 4.6 percent to $40.22.
"The remote possibility that a coordinated supply control
effort comes from this meeting, assuming it even happens, has
put market bears on the defensive," said Pete Donovan, broker
with Liquidity Energy in New York.
An index of prices across the commodity complex .TRJCRB
rose 2.2 percent to the highest level since mid-December.
In currency markets, the dollar sank against the euro, yen
and Swiss franc. The dollar index .DXY touched its lowest
since October 2015.
Against the yen JPY= , the greenback touched its lowest
since October 2014. The sharp move triggered market chatter that
the Bank of Japan had been speaking to dealers about activity in
the yen. It ended down 1 percent at 111.42 yen.
Benchmark U.S. 10-year note US10YT=RR yields fell to
one-week lows, while two-year notes US2YT=RR , the maturity
most sensitive to Fed rate expectations, slid to a two-week
trough.
The 10-year note was last up 11/32 to yield 1.8994 percent,
compared with 1.938 percent late on Wednesday.
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Currencies vs dollar http://link.reuters.com/tak27s
Oil prices http://link.reuters.com/beb23v
EM equities and the dollar http://link.reuters.com/syv58s
Commodities performance http://link.reuters.com/rac73w
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