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May 1, 2017

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United States growth boosts markets, steadies emerging nations' currencies

WASHINGTON -- Strong U.S. growth figures brought a reprieve to markets on Thursday after a Federal Reserve stimulus cut rattled emerging economy currencies despite rate rises by India, South Africa and Turkey.

European stocks initially fell after the Fed's announcement it would reduce its bond-buying program by US$10 billion to US$65 billion per month, citing a pick-up in the US economy.

But the mood turned around after the announcement that the U.S. economy grew at a stronger-than-expected annual rate of 3.2 percent in the fourth quarter.

By the end of trade, Frankfurt's DAX 30 added 0.39 percent and the CAC 40 in Paris rose 0.55 percent. London's FTSE 100 was marginally lower.

And on Wall Street, the news on fourth quarter economic growth, as well as some significantly strong corporate earnings results, notably Facebook's, drove a firm rebound.

The Dow Jones Industrial Average ended up 0.70 percent, the broader S&P 500 1.13 percent, and the Nasdaq Composite, powered by strong gains in Facebook, Twitter, Google and other online ad-dependent tech stocks, jumped 1.77 percent.

Earlier, Asian markets, which mostly finished trading ahead of the us GDP announcement, fell heavily again on the news the U.S. central bank further reduced its quantitative easing (QE) stimulus overnight.

In currencies, the emerging market economies hurt most by the turmoil, Russia's ruble, the South African rand, Turkey's lira, Brazil's real and the Indian rupee were all either flat or stronger, even as the dollar itself surged against other major currencies.

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