The European stock markets have surged after the Federal Reserve increased interest rates for the first time since 2006.
The main share indexes in France, the UK and Germany’s were all up by between 1% and 3% in morning trade.
The US central bank increased the range for its benchmark interest rate to between 0.25% and 0.5%, from the previous range of 0%-0.25%.
The Fed said the rise was part of a “gradual” process to get rates back to normal after years of being near zero.
“Considerable improvement” in the jobs market spurred the Fed into action.
London’s FTSE 100 rose 1.4% to 6,146.68, while Frankfurt’s Dax jumped more than 3% and the Cac 40 in Paris was 2.5% higher.
The European stock markets were following the lead given by markets in the US and Asia.
On Wall Street, the Dow Jones closed up 224.18 points, or 1.3%, at 17,749.09, while in Japan, the benchmark Nikkei 225 closed up 1.6% at 19,353.56.
After the Fed’s decision, the dollar rose against larger major currencies. Higher rates make the US a more attractive market for deposits, meaning demand for the dollar is likely to rise.
However, sterling recovered ground lost against the dollar and was 0.3% higher against the euro to €1.3783 after positive retail sales numbers for November.
At one point £1 bought almost $1.50.
British government-issued bonds, or gilts, rose in price following the Fed decision, meaning lower yields, or income.
Benchmark ten-year gilt yields fell 0.056 percentage points to 1.89%. While the specter of higher rates is often bad for existing debt prices, analysts said investors were pleased future Fed rate rises would be “gradual” in nature.
Car maker PSA Peugeot Citroen is writing down the value of its assets by 4.1 billion euros ($5.5 billion) to reflect the worsening state of the car market.
Peugeot said new accounting guidelines had prompted the move and that it was reversible when conditions improve.
The statement comes ahead of next week’s earnings and indicates it will report heavy losses for the period.
Global sales at France’s largest car firm fell 16% in 2012 to less than three million.
Peugeot is in the process of cutting 8,000 jobs and closing a factory to stem losses.
PSA Peugeot Citroen is writing down the value of its assets by 4.1 billion euros to reflect the worsening state of the car market
Chief financial officer Jean-Baptise de Chatillon said: “There was a realization in the second half that the crisis was going to be longer than expected… This is purely an accounting adjustment which has nothing to do with operations.”
France’s market regulator last year demanded that companies value their assets more realistically – prompting a 7.4 billion-euro charge from Credit Agricole.
A report in the French newspaper Liberation said the government was examining the possibility of buying a stake in the struggling company as a “last-resort plan”.
Peugeot, a founding member of the main French stock market index, the Cac-40, was demoted last year as a result of its tumbling share price.