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June 27, 2017

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Europe, some Asia markets rise on Fed plans

HONG KONG--European and some Asian stock markets rallied Thursday after the Fed signaled that U.S. interest rates would remain at record lows.

Equity investors had been awaiting the Federal Reserve's economic updates and statements by Chair Janet Yellen, who made clear that although the world's largest economy was seeing a steadily improving job market and modest inflation, there was no need to raise short-term rates from record lows anytime soon.

In early European trading, France's CAC 40 rose 0.7 percent to 4,564.00, while Germany's DAX gained 0.7 percent to 10,003.00. The FTSE 100 index of leading British stocks added 0.7 percent to 6,824.03.

U.S. stocks were poised to open marginally higher as Dow futures edged up 0.1 percent to 16,828.00 and the broader S&P 500 futures rose 0.1 percent to 1,950.60.

"The Fed managed to navigate through what some had expected to be a potentially tricky announcement by providing further fuel for both equity and Treasury market bulls," strategists at Rabobank said in a report.

Stan Shamu, market strategist at IG Markets in Melbourne, said, "With inflation picking up and unemployment falling, many investors out there were beginning to feel perhaps the Fed might be looking to raise rates sooner."

Asian markets were mixed Thursday, taking up the baton from a record-breaking Wall Street, after the Federal Reserve delivered a broadly upbeat outlook on the U.S. economy and suggested interest rates would remain low for some time.

Tokyo jumped 1.62 percent to finish at a five-month high, closing up 245.36 points to 15,361.16 despite a stronger yen. Sydney rose by 1.59 percent, or 85.48 points, to close at 5,468.2 and Seoul put on 0.13 percent, or 2.54 points, to 1,992.03.

Profit taking hit Hong Kong after spending most of the day in positive territory. The Hang Seng closed flat, edging down 13.99 points to 23,167.73 while Shanghai tumbled 1.55 percent, or 31.78 points, to 2,023.74.

'Tokyo up despite weak dollar'

Wall Street reacted positively. The S&P 500 climbed 0.77 percent to tap another record high, while the Dow gained 0.58 percent and the Nasdaq rose 0.59 percent

The prospect of interest rates staying low for at least another year sent the dollar falling to 101.91 yen in U.S. trade Wednesday from 102.17 yen earlier in Tokyo.

The greenback eased a fraction further in Asia on Thursday afternoon, buying 101.77 yen.

The euro was US$1.3617 and 138.58 yen, against US$1.3593 and 138.52 yen in New York.

"The Fed didn't say much that the market hadn't already perceived; hence U.S. stocks' generally positive ... reaction," Nicholas Smith, equity strategist at CLSA, told Dow Jones Newswires.

"More interesting is the fact of Japan shares' divergence from the dollar/yen market gyrations; the market is up strongly despite a weaker dollar," he added.

Gold fetched US$1,281.86 an ounce at 1055 GMT in Asia compared with US$1,270.69 late Wednesday.

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