Stocks rise globally on Fed; Greece still a concern

Thu Jun 18, 2015 6:02pm EDT
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By Ryan Vlastelica

NEW YORK (Reuters) - Stock markets around the world rallied on Thursday, while the U.S. dollar fell, a day after the Federal Reserve signalled that interest rates would rise more slowly than many had expected.

While uncertainty over Greece continued to weigh on sentiment, hopes that a deal would be reached returned European equities to positive territory.

U.S. stocks hit session highs after a German newspaper reported Greece's aid will be extended until year-end, and the Nasdaq hit a closing record.

The Fed said on Wednesday that the U.S. economy was probably strong enough to support a rate increase this year, but it lowered its forecasts for 2015 economic growth and reduced its federal funds rate forecast.

U.S. consumer prices posted last month their largest increase in more than two years in May, while jobless claims applications fell last week to a near 15-year low.

Analysts are torn on whether the first interest rate rise in nearly a decade will come in September or December, but the Fed's comments indicated that no matter when the first one occurred, the move would not be aggressive.

"Gradualism for rate increases is a soothing message for the market," said Alan Gayle, senior investment strategist and director of asset allocation at RidgeWorth Investments in Atlanta. "September remains on the table, but the downward drift in the forecasts for next year means the increases will happen gradually, and that's a relief for investors."

The Dow Jones industrial average .DJI rose 180.1 points, or 1 percent, to 18,115.84. The benchmark S&P 500 stock index .SPX gained 20.8 points, or 0.99 percent, to 2,121.24.   Continued...

A man walks under an electronic information board at the London Stock Exchange in the City of London January 2, 2013. REUTERS/Paul Hackett