TOKYO (AP) -- Shares edged higher in early European trading Thursday, tracking gains in Asia after Federal Reserve Chair Janet Yellen told Congress the central bank may slow the pace of its interest rate increases if inflation remains below its target level. Japan's Nikkei 225 was flat as a stronger yen cast a shadow over exporters' shares, but shares in South Korea and China were boosted by strong data reports.
KEEPING SCORE: Germany's DAX was flat at 12,627.14 and the CAC 40 of France edged 0.1 percent higher to 5,228.05. Britain's FTSE 100 edged 0.2 percent lower to 7,405.91. Dow futures were 0.1 percent higher and S&P 500 futures climbed 0.2 percent, suggesting an upbeat start for Wall Street.
ASIA'S DAY: Japan's Nikkei 225 stock index was flat at 20,099.81 and Hong Kong's Hang Seng index jumped 1.2 percent to 26,345.27. The Shanghai Composite index climbed 0.6 percent at 3,218.16 and the S&P ASX 200 advanced 1.1 percent to 5,736.80. South Korea's Kospi gained 0.7 percent to 2,409.49. Shares in Southeast Asia and Taiwan were mostly higher.
FED TALK: Yellen's comments in her semiannual testimony to Congress assuaged concerns among some traders that the Fed has been too hasty in raising interest rates despite stalling inflation and sluggish U.S. economic growth of just 1.4 percent in the first quarter. Many economists believe the Fed, which has raised rates three times since December, will increase rates one more time this year. The comments pushed the Dow up 0.6 percent to 21,532.14, a record high. The average last set a record high on June 19.
THE QUOTE: "While nothing groundbreaking in Chair Yellen's perfunctory testimony, she unambiguously drew attention to inflation as the critical determinant of Fed rate hikes," Stephen Innes, a senior trader at OANDA, said in a commentary. "Nothing better for investment sentiment than Dr. Yellen providing an upbeat economic assessment with a tepid inflation outlook."
CHINA TRADE: Chinese trade growth accelerated for a second month in June in a positive sign for global demand and the world's No. 2 economy. Exports rose 11.3 percent to $196.6 billion in June, up from May's 8.7 percent rate, and imports gained 17.2 percent to $153.8 billion, up from the previous month's 14.8 percent growth. The unexpectedly strong export demand could help to support growth that is forecast to weaken as Beijing tightens bank lending controls to reduce the risks of rising debt.
SOUTH KOREA: The Bank of Korea revised upward slightly its annual growth estimate for South Korea, to 2.8 percent this year, the fastest pace in three years for Asia's fourth-largest economy. Strong demand for computer chips and other high tech products is helping drive the recovery.
ENERGY: Benchmark U.S. crude fell 31 cents to $45.18 per barrel in electronic trading on the New York Mercantile Exchange. It rose 45 cents, or 1 percent, to settle at $45.49 per barrel on Wednesday. Brent crude, used to price international oils, fell 30 cents to $47.44 per barrel. It gained 22 cents, or 0.5 percent, to close at $47.74 per barrel in London.
CURRENCIES: The dollar slipped to 113.08 yen from 113.18 yen. The euro rose to $1.1419 from $1.1413.