London strikes record peak on Fed-fuelled rally

Roland JACKSON
 

Europe's stock markets pushed higher Thursday, with London striking a new record high, after the Federal Reserve painted a positive picture of the world's largest economy.

The dollar recovered ground a day after stumbling as the US central bank lifted interest rates by a quarter-point but gave a more dovish outlook for future hikes than many had expected.

Meanwhile the pound got a boost after the Bank of England signalled it was looking to tighten monetary policy in the future, although as expected it kept rates on hold for the moment.

Sentiment was buoyed also by the victory of the incumbent party in Dutch elections.

London stocks jumped higher with solid gains in the mining sector, which benefited from hopes of rising demand in a healthy world economy, striking a new high of 7,444.62 points.

It closed the day with a gain of 0.6 percent to 7,415.95 points, as the sterling surge took the edge off gains.

In the eurozone, both Frankfurt's DAX 30 and Paris' CAC 40 struck levels unseen since 2015.

- 'All about the Fed' -

However, Paris gains were tempered by accusations of a emissions-cheating scandal at Renault (LSE: 0NQF.L - news) , which sent the French carmaker's stock skidding 3.4 percent lower. Renault has emphatically decided the allegations.

"It's all about the Fed," Will Hamlyn, senior equity investment analyst at Manulife Asset Management, told AFP.

"There was no surprise that rates are going up but they're just been doing a fantastic job in managing expectations.

"Rates are still going to go up in line with... expectations, it's just that traders had booked positions that the trajectory of steepening would accelerate. Last night there was a bit of an unwinding on that."

Anglo American (LSE: AAL.L - news) shares topped the FTSE 100, soaring 8.6 percent to 1,297.50 pence.

The group gained also from news late Wednesday that Indian mining billionaire Anil Agarwal's holding company, Volcan Investments, was set to buy up to £2.0 billion of stock ($2.5 billion, 2.3 billion euros).

Elsewhere in London's mining sector, Glencore (Frankfurt: 8GC.F - news) and Antofagasta (Other OTC: ANFGF - news) each gained around five percent. Fresnillo (Frankfurt: A0MVZE - news) picked up around four percent, and Rio Tinto (Hanover: CRA1.HA - news) and Randgold around three percent.

- Miners flying -

"The global economy is going really well and the mining stocks this morning in the UK are flying, and that is what is leading the market up," added Hamlyn.

Wall Street stocks wobbled on Thursday.

US stocks had climbed higher on Wednesday after the Fed gave an upbeat assessment of the world's top economy,

And that continued into Asian business, with Hong Kong up 2.1 percent and Shanghai adding 0.8 percent.

As expected, the US central bank lifted borrowing costs by a quarter-point.

Fed boss Janet Yellen also said that while President Donald Trump's planned big-spending, tax-cutting plans could fuel growth and inflation, she would keep a wait-and-see stance.

The Fed also suggested only another two rises this year, confounding talk of a possible three or four, which sent the greenback tumbling in US trade.

- Dutch vote pleases -

"The other bit of market-pleasing news this Wednesday was the defeat of the far-right Geert Wilders by Mark Rutte in the Dutch general election," said Spreadex analyst Connor Campbell.

Dutch Prime Minister Rutte easily defeated anti-EU candidate Wilders in a vote considered a bellwether of populist support in Europe

The victory raised hopes extremist parties in France and Germany will also be held off in elections later this year.

The vote "takes a very unlikely event off the table which is marginally positive -- but I don't think anyone was really expecting he (Wilders) was going to win", noted Hamlyn.

- Key figures around 1630 GMT -

London - FTSE 100: UP 0.6 percent at 7,415.95 points (close)

Frankfurt - DAX 30: UP 0.6 percent at 12,083.18 (close)

Paris - CAC 40: UP 0.6 percent at 5,013.38 (close)

EURO STOXX 50: UP 0.9 percent at 3,439.08

New York - Dow: DOWN 0.07 percent at 20,935.33

Tokyo - Nikkei 225: UP 0.1 percent at 19,590.14 (close)

Hong Kong - Hang Seng: UP 2.1 percent at 24,288.28 (close)

Shanghai - Composite: UP 0.8 percent at 3,268.94 (close)

Euro/dollar: UP at $1.0738 from $1.0725

Pound/dollar: UP at $1.2362 from $1.2292

Dollar/yen: DOWN at 113.04 yen from 113.42 yen

Oil - Brent North Sea: DOWN 26 cents at $51.55 per barrel

Oil - West Texas Intermediate: DOWN 30 cents at $48.53

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