European markets react positively to US interest rate hold

European shares climbed higher in early trading on Thursday, mirroring gains on Wall Street and Asia, 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, strongly signalled 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 fuelling high inflation.

Miners led the European stock market higher as the Fed’s decision to keep rates unchanged pushed down the dollar on currency markets, thereby making commodities cheaper for holders of other currencies.

The STOXX Europe 600 Basic Resources index rose more than 3 per cent to its highest level since the middle of August. Shares in BHP Billiton, Anglo American, Rio Tinto and Fresnillo were up 3.5 to 4.5 per cent.

The pan-European STOXX 600 index rose for a second straight session and was up 0.7 per cent by 0707 GMT.

- Reuters