Asian stocks bounce as Yellen flags Fed support for economy

* Nikkei hits 3-week high, Asia ex-Japan shares off 6-week low

* Yellen says Fed has more work to do

* U.S. stocks at record high, U.S. bonds also supported

* Emerging market currencies, commodities benefit from dovish Yellen

Hideyuki Sano | Reuters

Asian stocks bounced from six-week lows on Thursday, spurred by Federal Reserve Vice Chair Janet Yellen's dovish comments which suggested the U.S. economy could count on stimulus support for a longer period than markets anticipate.

Yellen, in remarks released ahead of her closely-watched Senate confirmation hearing on Thursday to succeed Fed chief Ben Bernanke, said the Fed has "more work to do" to help the economy, indicating she was in no hurry to start tapering stimulus.

The comments sent U.S. stocks surging and supported bond prices, while the dollar came under pressure, although it narrowed its looses during the Asian session.

"Yellen said the jobless rate is too high, and inflation is too low. Nowhere in her comments one can find the context for tapering," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Global markets have been buffeted since May when the Fed first suggested that the start of stimulus tapering wasn't far off. Since then a run of mixed U.S. data has had markets constantly trying to second-guess the central bank's plans, often triggering sharp moves in asset prices.

The U.S. stock futures hit a record high following Yellen's comments, which came after regular U.S. trading hours on Wednesday.

Both the Dow and the S&P 500 ended at record highs on Wednesday, after results from Macy's eased some worries about the holiday season sales, boosting consumer discretionary shares.

In Asia, Japan's Nikkei jumped 1.4 percent and hit three-week high, also helped by data showing Japan's economic growth in July-September beat market expectations.

The world's third biggest economy grew an annualised 1.9 percent, above market expectations of 1.7 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.0 percent, moving way from a six-week low hit on Wednesday.

Mainland Chinese shares slipped, however, with banks shares hit by a rise in repo rates after the Chinese central bank drained funds.

Emerging market currencies, including those that took a hammering on Wednesday on concerns about imminent tapering of the Fed's stimulus, found some relief.

The Indonesian rupiah gained 0.6 percent to 11,535 per dollar, recovering from 4 1/2-year low set on Wednesday.

The euro hit one-week high against the dollar, having erased most of the losses it had suffered after the European Central Bank's surprise rate cut a week ago.

The euro last held at $1.3476, after having risen to a high of $1.3499 earlier.

U.S. bond prices gained, pushing the 10-year notes yield below 2.70 percent at one point. It last stood at 2.72 percent, flat from late U.S. levels but off an eight-week high of 2.79 percent.

Bond prices could rise further if Yellen hints at keeping low rates for longer.

Speculation is rife that Yellen may indicate she would like to see the jobless rate fall to six percent or below before raising rates. The Fed's current threshold for the jobless rate is 6.5 percent.

"The bond market will be looking at her comments on forward guidance. Bond yields, especially at the short end, will likely be crushed," Makoto Noji, senior strategist at SMBC Nikko Securities said.

Prospects of the Fed staying dovish for a longer period supported commodity and energy prices. Spot gold rose 0.2 percent to $1,282 per ounce while silver rose 0.7 percent to $20.73.

Copper also gained 0.5 percent though the rebound came after it had tumbled to a three-month low in heavy volume in the previous day -- in a possible sign of fragile global growth.

Oil futures were weighed by data suggesting a rise in U.S. inventories last week, but stayed above recent lows on concerns over Libyan supply outages as strikes and protests disrupted the country's oil exports.

U.S. crude futures recovered to trade at $93.80 per barrel, down slightly on the day but still above 4 1/2-month low of $92.86 set on Tuesday.

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