Asia Stocks Gain Slightly On Fed's Low Rate Pledge

CARLO PIOVANO

LONDON (AP) — World stock markets rose Thursday after the U.S. Federal Reserve pledged to keep interest rates low until late 2014 to nurture the country's stubbornly slow economic recovery.

The Fed cut rates to near zero in December 2008 during the financial crisis and has held them there ever since. The announcement that it expected rates to remain low was a sign that the Fed expects the U.S. economy, which is improving, to need significant help for three more years. But it also reinforced investors' confidence that the Fed was committed to restoring growth.

The statement was made by the Federal Open Market Committee (FOMC), the central bank's group of policy-setters.

"With the FOMC sending out a strong signal that monetary policy is likely to remain accommodative for even longer than previously expected, risk assets are in a very good position," said Stan Shamu of IG Markets in Melbourne.

Economic data out of the U.S. also helped market sentiment. Orders to U.S. factories for durable manufactured goods increased in December, lifted by solid business spending on machinery and equipment. Separate data showed a rise in weekly jobless claims, although the four-week average is still trending down.

Combined with the Fed's comments, the indicators pushed investors to snap up stocks, the euro, emerging markets currencies and commodities.

Britain's FTSE 100 rose 1.3 percent to 5,795, Germany's DAX gained 1.8 percent to 6,539.85 and France's CAC-40 added 1.5 percent to 3,363.23. The euro was up 0.4 percent at $1.3150.

Wall Street likewise rose on the open — the Dow Jones industrial was up 0.2 percent at 12,778.1 while the S&P 500 was down slightly, 0.25 percent, to 1,322.77.

Corporate news was mostly upbeat, with strong earnings from construction equipment maker Caterpillar and conglomerate 3M. In Europe, Nokia posted a loss but its shares rose slightly on hopes that sales of its new Windows phone would gain pace.