European stocks rallied the most since April in Wednesday’s trading after U.S. Federal Reserve Chairwoman Janet Yellen said interest rates don’t have to rise all that much further. The Stoxx Europe 600 index SXXP jumped 1.4% to 384.60, setting it on track for its highest close in two weeks and its biggest one-day percentage gain since April 24.

U.S. stocks rose toward records. The Dow Jones Industrial Average jumped more than 120 points to a fresh all-time high after hints that the Federal Reserve won’t rush to tighten monetary policy as inflation remains persistently below target. The statement from Yellen diverted attention from the release of emails by Donald Trump Jr. about his controversial meeting with a Russian lawyer.

RBS Agrees €4.12bn Settlement

Royal Bank of Scotland has agreed a £3.65bn (€4.12bn) settlement for its role in the sale of risky mortgage products in the US before the financial crisis. The bank's chief executive Ross McEwan, said: "Today's announcement is an important step forward in resolving one of the most significant legacy matters facing RBS. This settlement is a stark reminder of what happened to this bank before the financial crisis, and the heavy price paid for its pursuit of global ambitions."

The settlement is with the US Federal Housing Finance Agency, which oversees the secondary mortgage market. The UK government still owns 72% of RBS and has been waiting for its performance to recover so it can start selling some of that stake. The shares are currently worth around half the price the government paid for them but Philip Hammond has indicated that the government may be prepared to start selling shares at a loss. A separate settlement with the Department of Justice is expected later this year which could match or exceed today's settlement.

Excess Oil?

The Organisation of Petroleum Exporting Countries (OPEC) said on Wednesday its oil production jumped in June and forecast world demand for its crude will decline next year as rivals pump more, pointing to a market surplus in 2018 despite an OPEC-led output cut. Oil output in June rose above the demand forecast, led by gains in Libya and Nigeria, two members exempt from the cut aimed at eliminating excess supply.

OPEC officials nonetheless remain upbeat on the outlook. "We remain very optimistic … (about) helping the market to rebalance itself," OPEC Secretary-General Mohammad Barkindo said at an industry conference in Istanbul. Output is being curbed by about 1.2 million barrels per day, while Russia and other non-OPEC producers are cutting half as much, until March 2018. Oil prices rose above $48 a barrel on Wednesday as a U.S. report of falling inventories in the United States raised hopes that the glut is easing.