SINGAPORE stocks started the day higher on Thursday, as the US Federal Reserve's decision to keep interest rates low lifted the share prices of local banks and index counters.

The closely-watched announcement on Wednesday left policy unchanged for now, but new forecasts from central bankers expect the first interest rate increase next year.

Investor concerns were also allayed by China's Evergrande's reassurance over its finances. Worries about the fallout from its failure had caused stocks to tumble on Monday.

On the Singapore bourse, the Straits Times Index climbed 0.4 per cent or 13.51 points to 3,061.56 as at 9.04am.

Gainers outnumbered losers 138 to 19, or about seven securities up for every one down, after 87.9 million securities worth S$72.1 million changed hands.

One of the most active counters by volume was Sembcorp Marine, which held steady at 8.3 Singapore cents, with 7.6 million shares changing hands as at 9.05am.

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Other heavily traded securities included Yangzijiang Shipbuilding, which rose 2.9 per cent or S$0.04 to S$1.43, with 6.9 million shares traded, as well as Rex International, which gained 1.6 per cent or 0.3 Singapore cent to 19.7 cents, with 3.1 million shares traded.

Singtel lost 0.4 per cent or S$0.01 to S$2.46 in early morning trading. The telco on Thursday committed US$405 million to Bharti Airtel's 21,000 crore rupees rights issue. The telco said it intends to exercise its full rights entitlement for its direct 14 per cent stake in the regional associate.

Banking stocks meanwhile, rose in early morning trade. DBS was up 0.4 per cent or S$0.13 at S$29.43, UOB advanced 0.6 per cent or S$0.16 to S$25.51, while OCBC rose 0.4 per cent or S$0.05 to S$11.44.

Other active index counters included CapitaLand Investment, which was up 1.5 per cent or S$0.05 to S$3.31, as well as ComfortDelGro, which remained unchanged at S$1.52.

US stocks also rallied, with the Dow Jones Industrial Average closing 1 per cent higher at 34,258.32 on Wednesday. The broad-based S&P 500 gained 1 per cent to finish at 4,395.64 while the tech-rich Nasdaq Composite Index also rose 1 per cent to close at 14,896.85.

Europe stocks also finished in the green on Wednesday, with the Stoxx 600 index advancing 1 per cent, supported by commodity-linked stocks and banks which led gains.

Elsewhere in Asia, markets in Tokyo were closed for a public holiday.