Europe Markets

European stocks close higher; banking stocks higher after Fed hike; dollar hits near 14-year high

European stocks closed higher on Thursday after the U.S. Federal Reserve announced a 25 basis point rate increase and opened the door to three hikes next year.

Banking stocks lead gains

The pan-European Euro Stoxx 600 ended 0.86 percent higher with major bourses in positive territory. The FTSE 100 closed up 0.72 percent after the Bank of England held interest rates, as widely expected, and forecast that the U.K. should overshoot its 2 percent inflation target as early as late 2017.

Banking stocks were leading the gains across Europe, jumping more than 2.4 percent as investors perceived that the U.S. rate hike would be a positive for financials that have had to adjust to an environment of low yields since the financial crash of 2008. Monte dei Paschi announced on Thursday afternoon the troubled Italian lender is on track to raise a privately backed 5 billion euros in capital by the end of December. Its shares were up 2.99 percent at the European close.

Elsewhere, Rupert Murdoch's 21st Century Fox formally submitted an offer of around $14 billion for the 61 percent of British media giant Sky that it currently does not own. Sky shares were 0.45 percent higher on Thursday.

Meanwhile in the U.S., the Dow Jones industrial average continued higher as investors digested the U.S. central bank's decision to lift interest rates for only the second time in a decade.

EDF down 12%

Auto stocks were also moving higher on Thursday after data showed a 1.28 percent increase year-on-year in new car registrations in Europe. Also, the German carmaker Volkswagen has reportedly reached a deal with U.S. authorities to settle on the emissions test scandal, the Financial Times reported. Its shares were 0.78 percent higher at the close.

The French utility firm EDF was at the bottom of the pan-European Stoxx 600, dropping more than 12 percent on Thursday, after lower-than-expected 2017 earnings guidance.

Centrica, an energy and services company, saw its shares jump 5.6 percent after it reported a better-than-expected 2016 earnings outlook.

Swiss pharmaceutical manufacturer Lonza Group said on Thursday it is buying Capsugel, a U.S. maker of capsule products and other drug delivery systems, for $5.5 billion in cash. Lonza's shares were down by more than 4.6 percent at the close.

Dollar soars higher after fed meeting

Oil prices fell on Thursday as the dollar rallied to highs not seen in almost 14 years in the wake of U.S. interest rate forecasts from the Federal Reserve.

The dollar index, which measures the greenback against a basket of six major currencies, was up 1.53 percent at 103.31 on Thursday.

Meanwhile, Brent crude traded at around $53.53 a barrel as the European market closed on Thursday, down 0.69 percent, while U.S. WTI crude was around $40.43 a barrel, down 1.23 percent.

Also on Thursday's calendar, European leaders are gathering in Brussels for a summit where they will discuss relations with Russia and how to organize negotiations for the Brexit process.

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