European shares have surged after the US central bank increased interest rates for the first time since 2006.
The main share indexes in the UK, France and Germany’s were all up by between 1% and 2% in early trade.
The US Federal Reserve increased the range for its benchmark interest rate to between 0.25% and 0.5%, from the previous range of 0%-0.25%.
The Fed said the rise was part of a “gradual” process to get rates back to normal after years of being near zero.
“Considerable improvement” in the jobs market spurred the Fed into action.
London’s FTSE 100 rose 1.4% to 6,148.61, Frankfurt’s Dax rose 1.88% to 10,666.2 and the Cac 40 in Paris rose 1.95% to 4,714.85.
‘Christmas has come early’
European share markets followed the lead of stocks in the US and Asia.
On Wall Street, the Dow Jones went from a 50-point rise to stand up 79 points, and later added to that to close up 224 points at 17,749, a 1.3% gain.
In Japan, the benchmark Nikkei 225 closed up 1.6% at 19,353.56.
“With the Dow rising steadily from the moment [Fed chairwoman Janet Yellen] first opened her mouth, the rosy picture she painted of the US economy and the absence of major overseas threats has sent markets surging with relief,” said Robert Craig, private client investment manager at MB Capital.
“In a press conference that was short on precision and long on pragmatism, the Fed left the door wide open to future changes in direction.”
“But what is clear is that there will be no sudden spiral of further rate rises – and for stocks, Christmas has come early.”
Source: BBC
