Stocks finished higher Wednesday, wiping out most of the past week's losses, after the Federal Reserve reaffirmed its policies on bond purchases and record-low interest rates and as investors shrugged off concerns over Cyprus.
Brent crude oil rose above $108 a barrel, recovering from a three-month low, after the U.S. Federal Reserve signaled it would continue its stimulus programs and on optimism that European policymakers can keep a debt crisis in Cyprus from spreading.
U.S. Treasurys fell on Wednesday, with investors weighing the extent of a rally sparked this week by a proposed Cypriot bank tax and the Federal Reserve holding firm on its aggressive stimulus plan.
Markets have embraced the view that Cyprus will strike a deal, most likely with Russia. The euro rallied and stocks gained.
European shares pared their earlier gains to close narrowly mixed Wednesday as investors watched to see if Russia will extend or increase its loan agreement for struggling Cyprus.
U.S. bond investors are seeking new ways to hedge against the risk of a sharp rise in interest rates if the economy picks up and the Fed stops stimulus policies, the FT reports.
Asian stocks were under pressure on Wednesday as concerns rose if a bailout deal was still possible for Cyprus while Greater Chinese shares ignored the news to outperform the market as attention turned to domestic issues.
Chinese stocks are headed for a correction of up to 15 percent in the next two months, one technical analyst says.
With Cyprus creating a new wave of worry, markets will be looking to the Fed Wednesday to keep a steady hand on the tiller.
The euro dropped to near a four-month low against the US dollar on Tuesday and looked poised to extend losses as uncertainty about Cyprus reignited fears about the euro zone currency.
U.S. Treasurys prices climbed on Tuesday as a plan in Cyprus to tax bank accounts to help pay for a bailout unraveled, creating uncertainty about the island country's financial future and reviving fears about the stability of the euro zone.
Uncertainty about Cyprus set markets on edge, but they are far from pricing in the tiny country's exit from the euro.
Gold reversed earlier losses, hitting a 2-1/2 week high above $1,615 an ounce on renewed flight-to-safety investment before an anticipated vote by the Cyprus parliament on a bailout plan.
Oil fell Tuesday as Cyprus lawmakers rejected a measure to tax bank accounts as part of a bailout plan for its shriveled economy and worries persisted about Europe's debt problems.
European shares closed lower on Tuesday as markets await the outcome of a critical vote in Cyprus to tax bank deposits.
Stock index futures were higher on Tuesday as investors tried to shake off worries over Cyprus and following a better-than-expected housing starts report.
Prices for U.S. Treasurys climbed as investors awaited a parliamentary vote in Cyprus on a bailout plan crucial to avert bankruptcy.
Monetary policy could be set to change in the U.K. when George Osborne unveils his latest budget, but any alterations to the Bank of England's remit could sink the sterling even further, analysts told CNBC.
Asian markets licked their wounds on Tuesday after the previous day's sell-off on hopes that Cyprus's upcoming vote on the bank deposit levy will pass through parliament and secure the island's financial rescue.
Benchmark oil prices are likely to extend gains this week on expectations that the U.S. Federal Reserve will restate its commitment to an ultra-easy monetary policy at a meeting this week.
Get the best of CNBC in your inbox