Dovish US Fed statement cheers markets

European and US stocks rose toward records on Wednesday, US Treasuries rallied and the dollar retreated after Janet Yellen signaled the US Federal Reserve won't rush to tighten monetary policy as inflation remains below target.

Dublin

The Iseq Overall finished up about 0.75 per cent as bourses across Europe rose, although the Irish exchange’s performance was held back slightly by a mixed performance from some its heavyweight stocks.

CRH was up 2.5 per cent, matching its European peers.

Bank of Ireland was among the most traded shares of the day. At one stage it was up 2 per cent. However, a huge late-afternoon sell-off saw it finish the session down 1 per cent. Allied Irish Bank was relatively flat, finishing less than a half of one per cent in the black.

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It was a decent day for airlines across Europe generally, but Ryanair finished the session down about 0.5 per cent. This came on the back of a 2 per cent dip by its peer, Easyjet.

Irish Continental Group, the owner of Irish Ferries, was up 2 per cent, as traders said its shares were oversold in previous sessions.

London

Luxury goods group Burberry was a strong gainer, rising 3.2 per cent after reporting 3 per cent underlying revenue growth in the first quarter, helped by robust demand in mainland China and continuing good performance in its British market.

Premier Oil surged 35 per cent after a consortium including the company discovered at least a billion barrels of crude in the Gulf of Mexico. Climbing oil prices also helped boost the overall energy sector.

Education publisher Pearson continued its slide from the previous day when it announced plans to sell its stake in Penguin Random House, down around 4.7 per cent as broker downgrades and cuts to estimates rolled in. Investec, Panmure and Credit Suisse were among brokers revising down their targets for Pearson, with worries around its dividend persisting.

Shares in British oil and gas services company Amec Foster Wheeler slumped more than 8 per cent after confirming that Britain's Serious Fraud Office (SFO) was investigating the firm and individuals associated with the business.

Europe

The Stoxx Europe 600 Index rose 1.5 per cent at the close, the most since April. All 19 sectors advanced. The European benchmark yesterday fell to its lowest level since April after Donald Trump Jr. released emails suggesting Russia's government backed his father's presidential campaign.

Norwegian lender DNB led the banking sector higher, up 5.7 per cent after its second-quarter earnings came in significantly above forecasts, helped by a rise in lending margins and lower losses on its portfolio.

Burberry's peers Kering and LVMH also rose 2.4 per cent and 0.9 per cent respectively.

Online retailer Zalando gained 4.2 per cent after broker Societe Generale started its coverage of the stock with a "buy" rating, saying that it had the potential to play a much broader role in the future of fashion retailing.

New York

By late morning, all 11 major S&P 500 sectors were higher, with the defensive utilities index’s 0.91 per cent rise leading the advancers. The financial index, which is sensitive to rate hikes, pared early losses to trade little changed.

The dollar fell versus most major peers, while 10-year Treasury yields slid below 2.32 percent and gold futures rose. Oil bounced above $45 a barrel on reports of a decline in stockpiles.

American Airlines Group raised its estimate for a closely watched performance metric for the second time this year, citing higher average fares. The No.1 US airline's shares rose as much as 3.1 per cent in morning trading, lifting stocks of other large carriers. Unit revenue - which compares sales to flight capacity - is expected to increase by about up to 6 percent in the second quarter.

(Additional reporting: Bloomberg/Reuters)