Shares rise on Fed stimulus hopes

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By Sudip Kar-Gupta

LONDON - European shares rose on Thursday, with upgraded Dutch brewer Heineken among the top performers, as hints of new stimulus measures from the US Federal Reserve outweighed worries over the euro zone debt crisis.

The FTSEurofirst 300 index rose 0.4 percent to 1,100.58 points, bouncing back from a 1.2 percent fall on Wednesday. The Euro STOXX 50 index was up 0.7 percent at 2,469.12 points.

Minutes from the latest Fed meeting, released on Wednesday after European markets closed, showed the US central bank was likely to deliver another round of monetary stimulus 'fairly soon' unless the economy improved considerably.

“The market seems more interested in more prospects of stimulus from the Fed than worries over the euro crisis. In the short term, the market could get back up to the highs which we've seen in the last few weeks,” said Darren Easton, director of trading at London-based Logic Investments.

Easton recommended that investors stick with positions on expectations that signs of new intervention from the Fed or European Central Bank could lift equities over the next couple of weeks or so.

Other investors were more cautious, since previous rallies that have been driven on expectations of monetary stimulus have petered out as pledges by policymakers have failed to lead to action.

Worries that Greece may have to leave the euro zone as it struggles to meet the conditions of its sovereign bailout, and that the euro zone crisis may increasingly impact Spain and Italy, have also caused abrupt ends to previous equity rallies.

“I am a little cautious here. It has become more difficult to find good investments ideas and I tend to feel that the market has priced in favourable action by central banks,” said Don Fitzgerald, a fund manager at Tocqueville Finance, which manages about $2.2 billion in assets. - Reuters


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