By Tom Arnold and Kane Wu
LONDON/HONG KONG (Reuters) - Global shares extended gains on Thursday after the Federal Reserve said it was too early to consider rolling back emergency support for the economy, and U.S. President Joe Biden proposed a $1.8 trillion stimulus package.
The MSCI world equity index, which tracks shares in 49 countries, was 0.2% higher, on course for its best month since November.
The pan-European STOXX 600 opened 0.4% firmer, while E-mini futures for the S&P 500 index rose 0.4% and Nasdaq futures advanced 0.6%.
U.S. Treasury yields advanced 1.8 basis points to 1.6486, still short of Wednesday's two-week high, while euro zone government bond yields remained below two-month highs.
Fed Chair Jerome Powell said on Wednesday that "it is not time yet" to begin discussing any change in policy after the U.S. central bank left interest rates and its bond-buying programme unchanged, despite taking a more optimistic view of the country's economic recovery.
The Fed's stance, strong U.S. corporate earnings and the notion that Biden is going big on infrastructure were all supportive for markets, said François Savary, chief investment officer at Swiss wealth manager Prime Partners.
"The Fed confirmed the roadmap for any change in policy, which is a reassuring factor," he said. "It looks like tapering won't materialise until 2022 and that has induced weakness for the dollar, is supportive of market liquidity and means less pressure on emerging markets."
HUGE STIMULUS
Biden proposed the sweeping new $1.8 trillion plan in a speech to a joint session of Congress on Wednesday, pleading with Republican lawmakers to work with him on divisive issues and to meet the stiff competition posed by China.
He also made an impassioned plea to raise taxes on corporations and rich Americans to help pay for what he called the "American Families Plan" in his maiden speech to Congress.
He has also proposed nearly doubling the tax on investment income, which knocked stock markets last week.
Stephen Dover (NYSE:DOV), Franklin Templeton's chief market strategist in California, said the effect of the tax package on markets is hard to measure for now.
"If it passes, I think it will have an impact on individual stocks that will pay a higher rate of tax or companies with founders who will pay capital gains and could sell stocks," he said.
MSCI's broadest index of Asia-Pacific shares outside Japan built on early gains and added 0.48%.
Australia's S&P/ASX 200 edged up 0.25%, as strong oil prices lifted energy stocks, closing at their highest level in nearly 14 months.
China's blue-chip CSI300 index was 0.88% higher.
Markets in Japan were closed for a holiday but Nikkei futures rose 0.48%.
For the rest of the day, investors will focus on the first estimate of U.S. GDP for the first quarter, which is expected at 13:30 GMT.
DOLLAR IN DOLDRUMS
The Fed's doggedly dovish outlook and the White House's spending plans hampered the dollar, which traded just off nine-week lows.
Against a basket of currencies, the greenback was at 90.622, and a long way from the rally peak of 93.439 hit at the end of March.
The euro hit its highest since late February at $1.2150, before steadying at $1.2121.
Oil prices extended gains on Thursday as bullish forecasts for a demand recovery this summer offset concerns of rising COVID-19 cases in India, Japan and Brazil.
Brent crude for June rose 0.39% to $67.53 a barrel, while U.S. West Texas Intermediate crude for June was at $64.06 a barrel, up 0.31%.
Spot gold added 0.1% to $1,779.63 an ounce.