US Fed interest rate rise welcomed by international stock markets

In the wake of the US central bank increasing interest rates for the first time since 2006, stock markets around the world have rallied and welcomed the news.

The FTSE 100 index in the UK rose by 1.5%, and the main share indexes in Germany and France increased even more, with Frankfurt's Dax going up by more than 3%, while the Cac 40 in Paris saw a 2.4% boost.

Asian lead

The bumps in the European stock markets followed similarly positive receptions of markets in the US and Asia.

Wall Street saw the Dow Jones closed up 1.3% or 224.18 points, and the Japanese benchmark Nikkei 225 closed at 19,353.56, up 1.6%.

Robert Craig, private client investment manager at MB Capital, commented: "With the Dow rising steadily from the moment [Fed chairwoman Janet Yellen] first opened her mouth, the rosy picture she painted of the US economy and the absence of major overseas threats has sent markets surging with relief."

"But what is clear is that there will be no sudden spiral of further rate rises - and for stocks, Christmas has come early," he added

Gradual process

The news that the US Federal Reserve had increased the range for its benchmark rate to between 0.25% and 0.5% represented what it called a "gradual" process to get rates back to normal after the historical low levels of the past few years.

A further boost for markets around the world could lie ahead in the traditional so-called 'Santa rally', which sees stocks and shares rise in value as the year comes to an end.