European stocks extend gains

London - European stock markets climbed on Thursday, buoyed by the Federal Reserve indicating that ultra-low US interest rates would remain in place for a considerable time.

In afternoon trading, London's FTSE 100 index of top companies rose 0.79% compared to Wednesday's close to 6 832.06 points, Frankfurt's DAX 30 advanced 0.86% to 10 015.73 points and in Paris the CAC 40 index gained 1% to 4 575.48 points.

The European single currency increased to $1.3621, from $1.3593 late in New York.

After a closely watched meeting, the Fed's policy committee said on Wednesday it would cut a further $10bn from its monthly bond-buying, known as quantitative easing (QE), and maintain its "highly accommodative" monetary policy of record-low interest rates.

Business investment

Policymakers added in an upbeat statement that US economic growth "has rebounded in recent months" from the first-quarter contraction, while household spending and business investment were both rising.

The committee "believes that economic activity is rebounding in the current quarter and will continue to expand at a moderate pace thereafter," said Fed chief Janet Yellen at a news conference.

Asian markets were mixed on Thursday, but Tokyo rallied 1.62% to end at a five-month high at 15 361.16 points.

Sydney rose 1.59% and Seoul put on 0.13%, but Hong Kong closed flat and Shanghai tumbled 1.55%.

In London, the top gainer was British aircraft engine maker Rolls-Royce.

The company outlined plans to return £1bn to investors via a share buyback following the sale of its energy production arm to Germany's Siemens.

In response, Rolls-Royce shares soared 6.9% to 1 080 pence.

Central bank

In France, shares in power company EDF slumped 9.3% to €24.19 after its request to raise rates was rejected.

In foreign exchange deals, the pound rallied to a new five-year high at $1.7038 - last seen in August 2009 - on expectations of a British interest rate hike this year. It rose from $1.6990 on Wednesday.

The euro meanwhile slid to 79.96 British pence from 80.01 pence.

On the London Bullion Market, the price of gold rose to $1 282 an ounce from $1 269.75 on Wednesday.

Meanwhile the Swiss franc strengthened to 1.2163 francs against the euro and 0.8929 against the dollar after the central bank kept rates on hold and vowed it would defend at any cost the floor it has set of 1.20 francs to the euro.