WASHINGTON/LONDON, Nov 22 (Reuters) - Wall Street shares rose to record levels on Monday and European stocks turned higher after U.S. President Joe Biden picked Jerome Powell to continue as Federal Reserve chair, in a move welcomed as a signal of stability by global investors.
The S&P 500 rose 0.92% to 4,741.35 and the Nasdaq Composite 0.81% to 16,188.17 by 10:35 a.m. EST (1535 GMT). The Dow Jones Industrial Average rose 251.02 points, or 0.71% to 35,853.
Biden nominated Powell as Chair and Lael Brainard, the other top candidate for the job, as vice chair. Powell's current term has proven positive for risk assets, with the S&P gaining 69.7% since his appointment.
The U.S. dollar rose 0.34% against a basket of other major currencies.
European stocks were also higher after the news. Earlier they had been hit as traders weighed the likely impact of fresh European COVID-19 restrictions on economic prospects.
Europe's STOXX 600 equity benchmark clawed back its losses to rise 0.26%, while an MSCI gauge of European shares was down 0.5%.
Germany's acting Chancellor Angela Merkel was quoted as saying that Europe's biggest economy needs tighter measures to control coronavirus infections. L8N2SD30W
Merkel told officials from her CDU party that the situation is "highly dramatic", Bloomberg News reported, and warned that hospitals would soon be overwhelmed unless the fourth wave of the pandemic is broken.
"The recent wave of new COVID cases in Europe is weighing on the markets and the currency is also struggling with interest rate expectations," said John Marley, CEO of consultancy forexxtra.
Austria powered down public life on Monday as its fourth national COVID-19 lockdown began, the first in a western European country.
High frequency data has already shown the European economy struggling to gain traction relative to its U.S. counterpart.
Though equity analysts have kept their bullish European stock market recommendations for now, investors are closely watching sectors such as travel, hotels and banks. The travel and leisure index was Monday's top decliner in trading.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.28%. An Asian gauge was down 0.23%.
The euro fell 0.45% and touched a more than 16-month low. The common currency has been the prime mover in markets over recent sessions as investors bet that Europe's economy will lag the U.S. recovery.
U.S. Treasury yields rose following Powell's renomination. The two-year yield, which typically moves in step with interest rate expectations, traded up at 0.5578% and hit its highest level since early March 2020.
Fed Vice Chair Richard Clarida said last week that quickening the pace of tapering might be worth discussing at December's meeting. Minutes of the Fed's November meeting are due for release on Wednesday.
In commodities, gold prices were down, under pressure from a stronger dollar and faster Fed taper bets. Spot gold dropped 1.6% after sinking to $1,811.00 an ounce, its lowest since Nov. 5.
Oil prices reversed earlier losses but were still under pressure as the rising COVID-19 cases in Europe and a potential release of Japanese and Indian oil reserves raised concerns about both oversupply and weak demand.
Brent crude was last up 0.9% at $79.6 a barrel and U.S. crude rose 0.86% to $76.59 per barrel.
Bitcoin was down 0.76% after posting its worst week in two months last week.
Reporting by Chris Prentice in Washington and Saikat Chatterjee in London; Editing by Catherine Evans and Alexander Smith