Fed stimulus sends European shares to 14-month high
LONDON - Reuters
Traders work as television screen shows U.S. Federal Reserve Chairman Bernanke, on the floor of the New York Stock Exchange. REUTERS photoEuropean stocks rallied to a 14-month high early today, led by growth-oriented stocks like miners, after the launch of a new monetary stimulus program from the U.S. Federal Reserve in its latest attempt to drive growth in the world's largest economy.
After the European closing bell on Thursday, the Fed said it would pump $40 billion into the U.S. economy each month until it saw a sustained upturn in the weak jobs market. It also pushed back expectations for when it would raise interest rates.
"The market is now stuffed with cash", Justin Haque, a pan-European trader at Hobart Capital Markets said. "There's going to be a switch that could last six months from food & beverage and other defensive shares into cyclicals and banks."
Shares in basic resources companies, which depend on global economic activity and benefit from rising metal prices when inflation rises, led gainers as they added 2.5 percent.
By 0703 GMT the pan-European FTSEurofirst 300 index was up 1.2 percent to 1,119.57 points, a kevel not seen since July