Europe open: Stocks in the black as Fed signals slower pace of rate hikes

European stocks rose in early trade as investors welcomed the Federal Reserve’s decision to move more slowly on interest-rate hikes.

At 0850 GMT, the benchmark Europe Stoxx 600 index was up 0.3%, Germany’s DAX was up 0.4% and France’s CAC 40 was 0.8% higher.

Oil prices were also in the black, with West Texas Intermediate 2.3% firmer at $39.36 a barrel and Brent crude up 1.6% at $40.98.

“European markets have opened positively in early trading with miners leading the way as Brent Crude continues to climb,” said Andy McLevey, head of dealing at stockbroker Interactive Investor.

“Investors may find their appetite for risk increasing as the Fed leave rates unchanged and signalled fewer rate hikes in the coming months however with concerns remaining surrounding the health and growth prospects of the global economy it won't be for the faint hearted and the potential for short term volatility remains.”

On Wednesday, the Federal Reserve left the target range for the benchmark federal funds rate unchanged at 0.25% to 0.5%, as widely expected, and scaled back its forecasts on the path of interest rates.

The Fed, which lifted interest rates for the first time in nearly a decade back in December, said rate rises this year would be more gradual than expected, with two on the cards versus the four projected at the end of last year.

"Proceeding cautiously will allow us to verify that the labour market is continue to strength given the economic risk from abroad," said chairwoman Janet Yellen.

“Such caution is appropriate given short term interest rates are still near zero, which means monetary policy has greater scope to respond to upside than downside changes in the outlook,” she said.

The Fed's decision was in contrast to recent moves from the Bank of Japan and the European Central Bank, both of which took interest rates into negative territory.

The US central bank said that although the labour market was improving, it was still looking for inflation to reach its 2% target and reckoned the economy would continue to expand at a moderate pace.

Investors in the UK will be playing close attention to the Bank of England’s rate announcement at 1200 GMT.

The central bank is widely expected to leaves interest rates and the asset purchase programme unchanged at 0.5% and £375bn.

In corporate news, Rio Tinto was higher on news chief executive Sam Walsh will retire in July after three years in the job.

GlaxoSmithKline was little changed after saying chief executive Sir Andrew Witty will retire next year.

Cement maker LafargeHolcim rallied after its full-year earnings beat analysts’ expectations.

Deutsche Lufthansa slid after it forecast weak earnings growth for 2016.

Still to come on the data front, Eurozone trade balance and inflation figures are at 1000 GMT. In the US, the Philadelphia Fed survey, initial jobless claims and the current account balance are at 1230 GMT.