European stocks up after US Fed puts rates on hold

European shares have risen after the US central bank said it was likely to hold interest rates until 2013.

Leading markets are seeing a second day of gains, with London's 100 share index up 1.4% and Frankfurt's leading Dax index more than 2% higher.
The interest rate announcement helped stem one of the biggest sell-offs in recent years.
US shares had their best day for two years, closing up 4% after Tuesday's
Asian markets then steadied with gains of between 1-2%, helping Europe to its firmer start to the trading day.
Almost zero The Federal Reserve said in a statement that economic conditions were "likely to warrant exceptionally low levels for the federal funds rate (a key borrowing rate) at least until mid-2013".
The rate is currently between 0% and 0.25%.

Its statement painted a bleak picture of the US economy, referring to weaker than expected economic growth, depressed household prices and spending and sluggish unemployment growth.

One of the key reasons behind the massive sell-off over the past several days has been the fear that the US, the world's biggest economy, may be falling into recession, something the Fed's statement does little to allay.
The BBC's business editor, Robert Peston, says the Fed's move amounts to a prediction there will be no meaningful economic growth in the US for two years, and that should not give any joy to stock market investors.
Kelvin Tay of UBS Bank told the BBC that markets had only reacted positively to the Fed's announcement; the fact that rates would stay on hold.
"Markets were oversold and they were looking for a reason to rebound," he explained. "When the dust settles, people are going to focus on economic issues again."

Simon Derrick from Bank of New York Mellon says 'this is good news for the stock market'

Long-term worry Despite the rises, markets are a long way from recovering the dramatic falls of recent weeks.
Hope that the US central bank would take steps to boost economic growth gave European share markets their first day of rises in seven days on Tuesday, albeit with gains of between 1-2%.
Add in Wednesday's similarly modest gains and the bulk of the 20% loss of value for some major markets this month is still in place.
Structural issues The fears about the state of the US economy were fanned last week by Standard & Poor's decision to cut the US's credit rating from triple A to AA+ for the first time.
On top of this, the ongoing debt issues in Europe have prompted many analysts to revisit their own estimates for both economic and corporate profit growth.
"The immediate nervousness triggered by the downgrade... that is dissipating," said Robin Bew of the Economist Intelligence Group.
"But long-term worry, that the US and Europe have some serious issues and really don't seem to have a policy answer to them, still remains."

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