LONDON: European stocks posted strong gains in afternoon trading on Tuesday as Wall Street kicked off the day with an all-time high after the US Federal Reserve reaffirmed its aggressive stimulus policy.
London's FTSE 100 index of top companies jumped by 1.11 percent to 6,415.92 points, Frankfurt's DAX rallied 1.93 percent to 7,839.97 points and in Paris the CAC 40 jumped 1.62 percent to 3,771.81.
In New York, the Dow Jones Industrial Average surged to a record high, surpassing a level set more than five years ago.
Ten minutes into trade the Dow jumped to 14,222.13 points, well past the previous intraday high of 14,198.10 set on October 11, 2007.
It then eased slightly to 14,208.68 points, a gain of 0.57 percent, while the broad S&P 500 index was up by 0.79 percent and the Nasdaq Composite of high-tech stocks had gained 0.75 percent.
Back in Europe, Madrid gained 36 percent to 8,358.60 points and Milan advanced 2.01 percent to 15,855.02 points, despite ongoing political limbo in Italy in the wake of last week's elections.
In foreign exchange activity, the euro firmed to $1.3047 from $1.3024 late on Monday in New York. Gold prices rose to $1,584.25 an ounce on the London Bullion Market from $1,574.25.
"Despite continued lousy economic data, from Europe in particular, investors continue to take comfort from the fact that the Federal Reserve looks set to keep its foot hard on the stimulus pedal," said Michael Hewson, analyst at CMC Markets trading group.
Janet Yellen, vice chairwoman of the Fed board of governors, said in a speech that the central bank intends to "keep monetary policy highly accommodative until well into the recovery".
Traders appeared to shrug off the lack of action in Washington on dealing with $85 billion of US federal spending cuts that came into effect on Friday and which could shave around 0.5 percentage points off growth.
"The markets continue to consolidate around their highs and remain supported by the prospect that whatever happens from a macro
perspective central banks will remain as a backstop in case they are needed to pump more money into the system," said analyst Angus Campbell at traders Capital Spreads.
In company news, Standard Chartered's share price rallied 2.70 percent to 1,828.00 pence after the British-based emerging markets bank said it experienced good momentum so far this year, despite posting flat 2012 profits.
The bank said net profits came in at $4.79 billion last year, compared with $4.75 billion in 2011, even after it was slapped with a huge fine for violating US sanctions on Iran and three other countries.
While income rose eight percent to $19.07 billion, the lender was hit by the $667-million fine it was forced to pay US authorities last year to settle charges it violated US sanctions.
"2012 has been an interesting year for Standard Chartered, though it bows out in style posting a tenth consecutive record year of income and profits," noted Investec bank analyst Ian Gordon.
Asian equity markets also climbed on Tuesday, rebounding from a sell-off in the previous session, with Shanghai leading the rebound as China's annual parliamentary gathering kicked off.
The Shanghai stock market jumped 2.33 percent, reversing some of its 3.65-percent dive on Monday, when property and construction stocks were hit after the government set out rules aimed at capping house prices.
But eyes were on China's National People's Congress (NPC), which opened Tuesday with outgoing Premier Wen Jiabao saying the government would target growth of 7.5 percent for the world's number two economy in 2013 and 3.5 percent inflation.
Elsewhere in Asia, Hong Kong rose 0.10 percent, Tokyo added 0.27 percent and Seoul advanced 0.17 percent, while Sydney jumped 1.29 percent in value.
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