(MENAFN- AFP) European stocks rose on Wednesday, as concerns over emerging markets eased after a big interest rate rise in Turkey and before a key decision on Federal Reserve stimulus.However, markets gave up some of their earlier gains as the Turkish lira stabilised after rallying sharply on the overnight crisis rate increase.London's benchmark FTSE 100 index gained 0.25 percent to 6,589.12 points in midday deals, Frankfurt's DAX 30 added 0.40 percent to 9,446.99 points and the CAC 40 in Paris edged up 0.12 percent to 4,190.99.The euro gained against the dollar."The FTSE 100 is up ... as the Turkish lira stabilises," said David Madden, analyst at trading firm IG."Equity markets have welcomed Turkey's move to jack-up interest rates to prevent the lira from going into freefall. Financial markets like decisive action, and the bold decision by the country's central bank to prop up the currency was felt around the rest of Europe."The lira stood at 2.21 to the dollar in Wednesday trading, having spiked as high as 2.16 after the rate hike. That compared with a record-low level of 2.39 struck on Monday.The South African rand was meanwhile on the back foot, weakening against the dollar before the nation's own interest rate decision due at 1300 GMT.Asian equities advanced following Wall Street's lead overnight, as market tensions subsided before the outcome of the Fed's monetary policy gathering.Turkey's central bank, in a crisis meeting, ramped up its overnight lending rate to 12.0 percent from 7.75 percent, and lifted its pivotal one-week repo rate to 10.0 percent from 4.5 percent.Uncertainty over impact of Fed decision"Turkey's attempt to quash its own currency troubles by hiking interest rates ... overnight seems to have steadied the recent fears of an emerging markets rout," said dealer Jonathan Sudaria at London Capital Group."Whether ... the optimism can survive another expected $10 billion of tapering tonight is another question, but for now fears that an emerging market collapse would drag western economies down seemed to have subsided."The Federal Reserve decided last month to reduce its bond-buying by $10 billion a month to $75 billion from January, citing an improved US economy.Tighter US monetary policy has sparked outflows of foreign capital from emerging markets. A plunge in the Argentine peso last week sparked fresh worries about the economies of Brazil, India, South Africa and Turkey.Tensions have eased somewhat with India preceding Turkey in raising borrowing rates.The Reserve Bank of India lifted on Tuesday its benchmark repo rate, at which it lends to commercial banks, by 25 basis points to 8.0 percent."Central bank intervention has been the saviour of markets over the past two years and it was no different this morning with Turkey, among others, stepping in to stop their currency rout," said Rebecca O'Keeffe, head of investment at stockbroker Interactive Investor."With equity markets desperate for a reason to rise, this supporting move is exactly what investors need."However, with the danger of escalating currency crises in a number of different countries, investors will need to be brave to contend with the risks that are currently attached to these markets," she added.Haven investment gold rose to $1,255.03 an ounce on the London Bullion Market from $1,251.25 on Tuesday.In foreign exchange activity, the euro firmed to $1.3673 from $1.3667 late on Tuesday in New York.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.