The Deal: European Stocks Rally as Fed Trims Stimulus

LONDON (The Deal) -- European stock indices rallied and Asian markets were mixed  Thursday after the Federal Reserve said it would pare back its $85 billion monthly bond buying program by $10 billion starting in January and made reassuring comments about the outlook for interest rates.

The central bank said it doesn't foresee rates moving much beyond zero until well past the time  unemployment in the U.S. falls  below 6.5%.

In London, the FTSE was up 0.92% at 6,551.93.  U.K. retail sales data for November confirmed a picture of increasing consumer confidence after an October blip. Sales expanded 2% year-on-year, and were up 0.3% in the month, in line with forecasts.  In Frankfurt, the DAX jumped 1.37% to 9,307.91, and in Paris the CAC was up 1.49% at 4,170.83.

In London, AstraZeneca (AZN) rose after it announced plans to spend up to $4.3 billion buying out partner Bristol-Myers Squibb (BMY) from a diabetes joint venture.  Diabetes is becoming a major problem in many fast-growing emerging-markets where AstraZeneca is already present and the London company wants to tap into that demand.

In Germany, drugmaker Bayer also announced a deal with a partner, Algeta of Norway. It agreed to pay 17.6 billion Norwegian kroner ($2.9 billion) to take over the company, with whom it collaborates on the Xofigo prostrate cancer drug. The offer represents an improvement from an early November proposal from Bayer, which some analysts said at the time already looked pricey.  But shares in both companies rose, with Algeta trading just below the Nkr362 per share offer price.

In Tokyo, the Nikkei rose 1.74% to 15,859.22 as the falling yen, which touched a five-year low against the dollar, aided exporters. The Nikkei is at a six-year high. In Hong Kong, the Hang Seng  fell 1.1% to 22,888.75. Mainland Chinese indices also fell on concerns that a change of government policy will push up financing costs.