European shares climb to 2-week high as Federal Reserve leaves interest rates unchanged
Yesterday European shares climbed to a two-week high, boosted by a rally in mining equities, after the US Federal Reserve left interest rates unchanged and projected a less aggressive path for hikes next year and in 2018.
The Fed, however, signaled it could still tighten monetary policy by the end of this year as the labour market improved further. Fed Chair Janet Yellen said US growth was looking stronger and rate increases would be needed to keep the economy from overheating and fueling high inflation.
The pan-European STOXX 600 index rose for a second straight session and was up 0.7 percent by 0748 GMT after touching its highest level in two weeks. However, the index is still down around 6 percent so far this year.
Miners led the European stock market higher as the Fed's decision to keep rates unchanged pushed down the US dollar on currency markets, thereby making commodities cheaper for holders of other currencies.
The STOXX Europe 600 Basic Resources index rose 2.8 percent to its highest level since the middle of August. Shares in BHP Billiton, Anglo American, Rio Tinto and Fresnillo were up 2.7 to 3.4 percent.
Energy shares were also in demand after oil prices also rose on a weaker dollar, extending gains from the previous session when a surprise third consecutive weekly US crude inventory draw tightened supply.
Asian stocks outside Japan rose for a sixth day after the Federal Reserve refrained from raising US interest rates and scaled back expectations for increases in 2017, buoying demand for riskier assets. The MSCI Asia Pacific Excluding Japan Index climbed 1 percent to 454.65 as of 4:01 p.m. in Hong Kong, heading for the highest close since the 9 September. Fed officials said the case for higher interest rates has strengthened, but they had decided “to wait for further evidence of continued progress” toward the central bank’s objectives.