Dollar Hits 15-Month Low, Global Stocks Firm on Rate View

LONDON (Reuters) - The dollar hit a fresh 15-month low and world stocks held near a three-week high on Wednesday after remarks from Federal Reserve officials reinforced the view that U.S. interest rates will remain near zero for some time.

Strong Chinese data on factory output and retail sales, along with forecast-beating results from Italy's biggest bank Unicredit following upbeat reports from other banks, encouraged investors to buy risky assets.

Top Fed officials said in a string of speeches on Tuesday that high unemployment and reluctant consumers would likely make a U.S. economic recovery weak and erratic.

Data on Friday showed the U.S. jobless hit 10.2 percent in October, its highest since 1983.

The prospect of near-zero interest rates persisting has prompted investors to sell dollars for higher-yielding currencies, such as the Australian dollar, while keeping alive the momentum for a risk asset rally.

"Market volatility may remain high but I continue to believe we will see significant new highs across the board before the year-end," said Stephen Jen, managing director of macroeconomics and currencies at Bluegold Capital Management.

"The Fed will not be in a hurry to tighten. With incremental growth both in the U.S. and the rest of the world being positive, and if the Fed remains easy, I believe risk assets will continue to rally."

The dollar index, which measures its strength against major currencies, fell to 74.806 <.DXY>, while the euro rose 0.3 percent to a two-week high of $1.5043.

The Australian dollar hit a 15-month high of $0.9345. The country's central bank raised its main interest rate by 25 basis points to 3.5 percent last week, the second hike in as many months.

UPBEAT BANK RESULTS MSCI world equity index <.MIWD00000PUS> rose half a percent toward its highest levels in three weeks. The FTSEurofirst 300 index <.FTEU3> rose 0.7 percent.