Markets Cheer Fed Interest Rates Outlook

Global stock markets have turned higher after the US Federal Reserve kept interest rates on hold in the world's biggest economy and signalled a more gradual rise in rates this year than previously thought.

Fed officials pointed to risks from global economic weakness and volatile financial markets as they indicated that they now foresee two rather than four rate hikes during 2016.

In London, the FTSE 100 was about 0.7% higher in early trading while markets in Europe also saw gains.

It (Other OTC: ITGL - news) came after the S&P 500 Index climbed 0.6% on Wednesday as investors welcomed the prospect of a more gradual tightening of interest rates.

Asian markets followed Wall Street higher with South Korean and Chinese indices up, as looser monetary policy left open the potential for more money flowing into commodities and shares.

But Japan's Nikkei fell as a strengthening yen against the US dollar dented its exporters' prospects.

The US raised interest rates from near-zero in December after they were held for seven years to support the economy during the financial crisis.

But since then the Fed has held off from further hikes amid market jitters and a sharp slowdown in China.

Resuming increases too quickly could slow growth or add to investors' nerves.

Fed chair Janet Yellen said following the latest rates decision that US wage growth had been surprisingly sluggish.

Economists said that based on the concerns that officials expressed about the global economy, they doubted that they would be ready to hike rates next month.