Bond yields in the euro area fell and stock markets rallied on Wednesday following comments by U.S. Federal Reserve chief Janet Yellen.
In a prepared testimony to be delivered to Congress, Yellen said the U.S. economy is healthy enough to absorb further gradual rate increases and the slow wind down of the Fed`s bond portfolio.
The pan-European STOXX 600 equity index extended gains to hit a session high, up 1 percent with all sectors in positive territory.
Government bond yields across the bloc extended their declines, with Germany`s benchmark Bund yield hitting its lowest level in almost a week at 0.514 percent.
Sterling jumped to the day`s high of $1.2910 as the dollar weakened broadly, up from $1.2870 before the speech was published.
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