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By Herbert Lash
NEW YORK (Reuters) - The dollar gained and a gauge of global equity markets surged for a third day on Wednesday, as investors cheered expectations of more central bank stimulus and reports that scientists were developing a vaccine for the deadly coronavirus.
U.S Treasury yields rose on early reports that a Chinese university team found a drug to treat people infected with the virus while UK researchers said they made a "significant breakthrough" in finding a vaccine.
A total of 24,363 cases have been confirmed in China, including 490 deaths. The World Health Organization said there are "no known proven effective therapeutics" against the virus.
Euro zone business activity accelerated in January, hinting the worst may be over for the bloc's economy, and U.S. data fed hopes for moderate growth even as consumer spending slows.
MSCI's gauge of stocks across the globe <.MIWD00000PUS> gained 0.86%, just 1% from a record high set two weeks ago. But the Nasdaq and S&P 500 on Wall Street set new closing highs.
Yousef Abbasi, global market strategist at INTL FCStone Financial Inc in New York, said risk assets got a lift from stimulus efforts by China's central bank and U.S. Federal Reserve operations in the repo market.
"I have a tough time justifying why this market is trading at 19 times earnings and why we have managed to snap back from any sell-off since October," Abbasi said, regarding U.S. stocks.
"But at this point, looking at this market, it almost feels like any hiccup further emboldens the global central bank put," he said, referring to central bank activity that increases market liquidity and encourages risk taking.
Investors are hungry for risk again after markets reeled from U.S.-Iran tensions and the coronavirus outbreak, said Valentin Marinov, head of G10 FX Strategy at Credit Agricole CIB Global Markets in London.
"There is a lot of cash on the side-lines that is now being invested in risk assets and carry trades," Marinov said.
The Dow Jones Industrial Average <.DJI> rose 483.22 points, or 1.68%, to 29,290.85. The S&P 500 <.SPX> gained 37.1 points, or 1.13%, to 3,334.69 and the Nasdaq Composite <.IXIC> added 40.71 points, or 0.43%, to 9,508.68.
In Europe, the pan-regional STOXX 600 index <.STOXX> rose 1.23% and emerging market stocks rose 0.51%.
IHS Markit's final euro zone composite Purchasing Managers' Index (PMI), seen as a good indicator of economic health, rose to a five-month high of 51.3 in January from 50.9 the previous month.