European shares hit a two-week high on Thursday, tracking gains on Wall
Street and in Asia, in a broad rally after the Federal Reserve announced
a modest cut in its stimulus and hinted it would keep rates low for a
longer period.
The US central bank said it would trim the pace of its monthly asset purchases by $10 billion to $75 billion and suggested its key interest rate would stay at rock bottom even longer than previously promised.
"The overall announcement is not as hawkish as it first appeared. As the Fed announced the taper, it also pushed out expectations for when it is going to lift the policy rate," Daniel McCormack, strategist with Macquarie, said.
"None of this is a negative. Equities tend to outperform in tightening cycles and the reason for that is that in tightening cycles growth and demand is strong. This all means you want to be in cyclicals such as industrials, technology, consumer discretionary and financials.
Cyclical sectors were top performers in early trading, with financials , construction and materials and property companies rising 1.9 to 2.4 per cent.
At 0837 GMT, the FTSEurofirst 300 was up 1.6 per cent at 1,279.12 points after rising as far as 1,280.51, the highest since early December. The index is up nearly 13 per cent so far this year.
European equities mirrored overnight gains in US stocks, with both the S&P 500 and the Dow Jones closing at all-time highs following the move of the Fed, which also said the US economy was strong enough to easily withstand a liquidity cut.
The US central bank said it would trim the pace of its monthly asset purchases by $10 billion to $75 billion and suggested its key interest rate would stay at rock bottom even longer than previously promised.
"The overall announcement is not as hawkish as it first appeared. As the Fed announced the taper, it also pushed out expectations for when it is going to lift the policy rate," Daniel McCormack, strategist with Macquarie, said.
"None of this is a negative. Equities tend to outperform in tightening cycles and the reason for that is that in tightening cycles growth and demand is strong. This all means you want to be in cyclicals such as industrials, technology, consumer discretionary and financials.
Cyclical sectors were top performers in early trading, with financials , construction and materials and property companies rising 1.9 to 2.4 per cent.
At 0837 GMT, the FTSEurofirst 300 was up 1.6 per cent at 1,279.12 points after rising as far as 1,280.51, the highest since early December. The index is up nearly 13 per cent so far this year.
European equities mirrored overnight gains in US stocks, with both the S&P 500 and the Dow Jones closing at all-time highs following the move of the Fed, which also said the US economy was strong enough to easily withstand a liquidity cut.
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