Janet Yellen signalled that interest rates would remain low for some time
Janet Yellen signalled that interest rates would remain low for some timeReuters

Emerging market stocks and currencies strengthened after the Federal Reserve chair Janet Yellen signalled that interest rates would remain low for the foreseeable future.

The MSCI Emerging Markets Index gained 0.3% on the back of the news, its eighth straight daily rise. The Stoxx Europe 600 Index also registered a 0.3% gain.

Meanwhile, Indonesia's rupiah gained 0.6% against the dollar, China's yuan added 0.2% and the South Korean won was up 0.6%.

Turkey's lira had previously risen to a year high on the back of Sunday's victory for Prime Minister Recap Tayyip Erdogan's AK Party in local elections.

Yellen said the Fed's "extraordinary commitment is still needed" and that the monetary stimulus programme would continue for "some time".

The US economy is still grappling with high unemployment and slow growth.

China's official manufacturing index posted 50.3, little changed from the previous month while a private HSBC gauge registered 48, down from 48.5 in February.

There's growing sentiment that the Chinese government may take measures to boost growth.

Moreover, the Ukraine crisis seems to have calmed, as some Russian troops began withdrawing from the country's eastern border.

US Secretary of State John Kerry held emergency talks with his Russian counterpart Sergei Lavrov on Sunday in a bid to stave off an escalation in the standoff. The Russian rouble was up 0.4% against the greenback on Tuesday.

Investor sentiment appears to be warming to the emerging markets again, who on the whole enjoyed a strong March after months of decline.

Major markets also responded well to Yellen's statement, while safety assets like gold fell.