NEW YORK, Feb 18 (Reuters) - U.S. stocks rallied, European stocks notched a record closing high and crude oil prices rebounded on Wednesday as investors parsed the minutes from the U.S. Federal Reserve's most recent policy meeting and assessed evolving geopolitical developments.
All three major U.S. indexes pared gains in afternoon trading but closed in positive territory, while gold rebounded as Ukraine peace talks ended without a clear resolution.
A report that Christine Lagarde plans to leave her role as European Central Bank President early dampened the euro and bolstered the dollar.
"(Lagarde) has been a calming voice, and it's been nice to have solid leadership in place," said Ryan Detrick, chief market strategist at Carson Group in Omaha. "Potential rumors that she might be leaving a tad earlier, it's shaken up currency markets a little bit."
On the geopolitical front, as peace negotiations ended, Ukrainian President Volodymyr Zelenskiy accused Russia of delaying progress toward reaching a deal.
Iran's temporary closure of parts of the Strait of Hormuz, a crucial global oil supply route, also added to supply worries.
This "double-whammy of continued geopolitical uncertainty ... has led to higher oil and higher gold prices," Detrick said.
Minutes from the Fed's most recent monetary policy meeting revealed officials were in near-unanimous agreement to hold interest rates steady, but remained split over their next move.
The Dow Jones Industrial Average rose 129.47 points, or 0.26%, to 49,662.66, the S&P 500 rose 38.10 points, or 0.56%, to 6,881.32 and the Nasdaq Composite rose 175.25 points, or 0.78%, to 22,753.64.
Europe's STOXX 600 closed at a record high, with defense and banking stocks leading the charge, as investors assessed earnings and reports of a leadership transition at the ECB.
MSCI's gauge of stocks across the globe rose 6.28 points, or 0.60%, to 1,048.72.
The pan-European STOXX 600 index rose 1.19%, while Europe's broad FTSEurofirst 300 index rose 30.30 points, or 1.22%.
Emerging market stocks rose 3.64 points, or 0.23%, to 1,559.34. MSCI's broadest index of Asia-Pacific shares outside Japan closed higher by 0.09%, to 796.73, while Japan's Nikkei rose 577.35 points, or 1.02%, to 57,143.84.
DOLLAR ADVANCES
The dollar strengthened on the heels of upbeat durable goods and housing starts data, while the euro dipped on the report about Lagarde's plans to leave her post early.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.61% to 97.73, with the euro down 0.58% at $1.1784.
Against the Japanese yen, the dollar strengthened 0.98% to 154.78.
In cryptocurrencies, bitcoin fell 2.15% to $66,196.23. Ethereum declined 3.08% to $1,938.20.
U.S. Treasury yields rose after solid data reinforced expectations that the Fed will keep rates on hold, and the Treasury Department's auction of 20-year bonds showed lackluster demand.
The yield on benchmark U.S. 10-year notes rose 3.3 basis points to 4.087%, from 4.054% late on Tuesday.
The 30-year bond yield rose 2.8 basis points to 4.7108% from 4.683% late on Tuesday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 3.1 basis points to 3.468%, from 3.437% late on Tuesday.
Crude prices surged on worries over supply disruption following the abrupt end to the Russia-Ukraine peace talks and the ongoing conflict between the United States and Iran.
U.S. crude jumped 4.59% to settle at $65.19 per barrel, while Brent settled at $70.35 per barrel, up 4.35% on the day.
Gold rebounded from a one-week low as rising geopolitical tensions revived demand for the safe-haven metal.
Spot gold rose 2.22% to $4,985.46 an ounce. U.S. gold futures rose 2.03% to $4,982.20 an ounce.
(Reporting by Stephen Culp: Additional reporting by Niket Nishant in London and Scott Murdoch in Sydney. Editing by Jane Merriman, Chizu Nomiyama and Deepa Babington)
By Stephen Culp
