By Matt Scuffham and Tom Arnold

NEW YORK/LONDON (Reuters) – Global shares extended gains on Thursday, after the Federal Reserve said it was too early to consider rolling back emergency support for the economy and U.S. President Joe Biden proposed a $1.8 trillion stimulus package.

Strong U.S. economic data also provided impetus to equity markets, sparking optimism over the recovery prospects for the world’s biggest economy.

MSCI’s gauge of stocks across the globe gained 0.51%.

The pan-European STOXX 600 index rose 0.17%

U.S. economic growth accelerated in the first quarter, fuelled by massive government aid to households and businesses, charting the course for what is expected will be the strongest performance this year in nearly four decades.

“Assuming that COVID variants remain contained, the second quarter is set for a further acceleration in growth as the re-openings continue,” said Katherine Judge, senior economist at CIBC Capital Markets.

The Dow Jones Industrial Average rose 142.38 points, or 0.42%, to 33,962.76, the S&P 500 gained 29.08 points, or 0.70%, to 4,212.26 and the Nasdaq Composite added 101.72 points, or 0.72%, to 14,152.75.

Benchmark 10-year notes last fell 15/32 in price to yield 1.6735%, from 1.62% late on Wednesday.

Fed Chair Jerome Powell said on Wednesday that “it is not time yet” to begin discussing any change in policy after the U.S. central bank left interest rates and its bond-buying programme unchanged, despite taking a more optimistic view of the country’s economic recovery.

The Fed’s stance, strong U.S. corporate earnings and the notion that Biden is going big on infrastructure were all supportive for markets, said François Savary, chief investment officer at Swiss wealth manager Prime Partners.

“The Fed confirmed the roadmap for any change in policy, which is a reassuring factor,” he said. “It looks like tapering won’t materialise until 2022 and that has induced weakness for the dollar, is supportive of market liquidity and means less pressure on emerging markets.”

HUGE STIMULUS

Biden proposed the sweeping new $1.8 trillion plan in a speech to a joint session of Congress on Wednesday, pleading with Republican lawmakers to work with him on divisive issues and to meet the stiff competition posed by China.

He also made an impassioned plea to raise taxes on corporations and rich Americans to help pay for what he called the “American Families Plan” in his maiden speech to Congress.

He has also proposed nearly doubling the tax on investment income, which knocked stock markets last week.

Stephen Dover, Franklin Templeton’s chief market strategist in California, said the effect of the tax package on markets is hard to measure for now.

“If it passes, I think it will have an impact on individual stocks that will pay a higher rate of tax or companies with founders who will pay capital gains and could sell stocks,” he said.

MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.31% higher, while Japan’s Nikkei rose 0.21%.

DOLLAR IN DOLDRUMS

The Fed’s doggedly dovish outlook and the White House’s spending plans hampered the dollar, which traded just off nine-week lows.

The dollar index rose 0.182%, with the euro down 0.06% to $1.2116.

Oil prices extended gains on Thursday as bullish forecasts for a demand recovery this summer offset concerns of rising COVID-19 cases in India, Japan and Brazil.

U.S. crude recently rose 1.91% to $65.08 per barrel and Brent was at $68.58, up 1.95% on the day.

Spot gold dropped 0.8% to $1,767.11 an ounce. U.S. gold futures fell 0.50% to $1,764.70 an ounce.

(Additional reporting by Kane Wu in Hong Kong, Andrew Galbraith in Shanghai and Scott Murdoch in Hong Kong; Editing by Jacqueline Wong, Kim Coghill, Gareth Jones, Chizu Nomiyama, Peter Graff)