Federal Reserve propels stocks, dollar higher

Stock markets in Europe scored big gains on Thursday, US equities resumed their upward march and the dollar rallied, a day after the Federal Reserve hiked interest rates. The Fed decision Wednesday to raise the benchmark interest rate was expected, but the announcement was more hawkish for the dollar than many expected because the US central bank signaled it expects three more rate increases next year instead of two. The news sent the dollar spiking to a near 14-year high against the euro. The yield on 10-year US Treasury bonds hit its highest level since the summer of 2014, having already soared in the wake of Donald Trump's surprise election victory. "Many were expecting the Fed to try to temper rate hike expectations next year to try to avoid exacerbating the strength in the dollar," said Omer Esiner, analyst at Commonwealth Foreign Exchange. The Fed's stance "effectively, gives investors a greenlight to continue bidding the dollar and bond yields higher." Bank shares led equity markets in both Europe and the US. Frankfurt's top gainer was Deutsche Bank, and the biggest winner in Paris was lender BNP Paribas, followed by Societe Generale and Credit Agricole. US banks also rose sharply. "There could be no better news for the banking sector than higher rates," said London Capital Group analyst Ipek Ozkardeskaya, noting that the sector had struggled for years with the low global interest rate environment. "Now, finally, they can see the light at the end of the tunnel. Paris and Frankfurt each gained 1.1 percent in their first day of trading after the Fed announcement. The London stock market meanwhile shifted into positive territory after the Bank of England held interest rates at a record low, closing just a tad shy of the key 7,000 level. US stocks, which closed lower Wednesday after the Fed news, moved back into rally territory, with the Dow climbing 0.3 percent to 19,852.24, raising anew the possibility of the index hitting 20,000. "We are back in a place where we are all expecting an environment that is pro-growth, pro-business, less regulation," said Art Hogan, chief market strategist at Wunderlich Securities. - Key figures around 2200 GMT - New York - Dow: UP 0.3 percent at 19,852.24 (close) New York - S&P 500: UP 0.4 percent at 2,262.03 (close) New York - Nasdaq: UP 0.4 percent at 5,456.85 (close) London - FTSE 100: UP 0.7 percent at 6,999.01 (close) Frankfurt - DAX 30: UP 1.1 percent at 11,366.40 (close) Paris - CAC 40: UP 1.1 percent at 4,819.23 (close) EURO STOXX 50: UP 1.3 percent at 3,252.38 Tokyo - Nikkei 225: UP 0.1 percent at 19,273.79 (close) Hong Kong - Hang Seng: DOWN 1.8 percent at 22,059.40 (close) Shanghai - Composite: DOWN 0.7 percent at 3,117.68 (close) Euro/dollar: DOWN at $1.0416 from $1.0533 Wednesday Dollar/yen: UP at 118.17 yen from 117.08 yen Pound/dollar: DOWN at $1.2423 from $1.2559 Oil - West Texas Intermediate: DOWN 14 cents at $50.90 per barrel Oil - Brent North Sea: DOWN 12 cents at $54.02