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Europe: Stocks rally at open after US rate hike

European stock markets rebounded at the start of trading on Tuesday after falling heavily towards the end of the previous session.

[LONDON] European stock markets opened with strong gains Thursday as the Federal Reserve ended months of uncertainty by raising US interest rates for the first time in nearly a decade.

Frankfurt and Paris both jumped by more than 2.0 per cent, while outside the eurozone London's main index won 1.6 per cent compared with Wednesday's close ahead of the Fed decision.

The strong opening eased off slightly shortly after the open.

At about 0810 GMT, London's benchmark FTSE 100 index was up 1.3 per cent at 6,141.7 points. Frankfurt's DAX 30 gained 1.9 per cent to 10,663.3 points and in Paris the CAC 40 won 2.0 per cent to 4,716.

"With the uncertainty surrounding the Fed now cleared and panic not ensuing, everything is now in place for a strong end to the year," said Craig Erlam, senior market analyst at Oanda trading group.

Asian stock markets rallied for a second day Thursday and the dollar clocked up advances against most other currencies.

Wednesday's widely expected move had been met with a surge in shares in New York, as the US central bank reiterated its view that the world's number-one economy is in rude health.

It also brings to an end months of speculation and uncertainty that had rattled world markets and fuelled concerns that the economy's recovery was not as strong as thought.

The Fed raised its benchmark federal funds rate, locked near zero since the financial crisis, by a quarter point to 0.25-0.50 per cent, saying the world's biggest economy is growing solidly and should accelerate next year to a respectable 2.4 per cent pace.