Europe midday: German stocks hit record highs on Fed low rate pledge

Germany's DAX hit a record high on Thursday as European shares gained broadly on the back of a US federal Reserve pledge to keep interest rates low.

The pan-European STOXX 600 was up 0.12%, slightly off morning gains. Germany’s DAX outperformed with an 0.82% increase as automakers drove the market, while the UK’s FTSE 100 was flat ahead of the Bank of England’s monetary policy decision due later in the day.

US Treasury 10-year yields rose again after the Fed decision, sparking rises in automakers, banks, miners and travel & leisure.

"The US central bank lifted its growth forecast for 2021 but at the same time it said it is in no rush to hike rates. The Fed made it clear that even though the economy is rebounding nicely, it is still a long way off from achieving its economic targets," said CMC Markets analyst David Madden.

"Even though bond yields have risen – the US 10-year yield is 1.72% - stock markets have not been knocked back so it seems that equity traders are no longer fearful of higher yields, for now anyways."

In equity news, Volkswagen, Porsche and Daimler were all higher.

National Grid shares fell after the company agreed to buy Western Power Distribution from PPL Corp of the US for £7.8bn and to sell Narragansett Electric to PPL for $3.8bn (£2.7bn) to shift its business towards electricity.

Shares in National Express fell after the transport operator swung to a loss in 2020 as it took a hit from the Covid-19 pandemic.

Ocado stock was in the red after the online supermarket said it expects positive revenue growth in the second quarter after reporting a 40% rise in revenue for the 13 weeks to the end of February as more Britons had their groceries delivered during the current national lockdown.