LONDON: Stock markets flattened Thursday and the dollar lost support as investors gave a lukewarm response to the Federal Reserve's signal that US interest rates may rise faster than expected.
US central bankers on Wednesday hinted that they may need to raise interest rates more rapidly than planned owing to "considerable uncertainty" linked to US President-elect Donald Trump's fiscal stimulus plans that risks fanning inflation.
This was according to minutes of the final 2016 policy meeting in December at which the US central bank lifted rates.
In the wake of the Fed's update, Wall Street stocks won solid gains Wednesday, Tokyo shares ended flat Thursday and Europe's main stock markets fared no better at the half-way stage.
London's benchmark FTSE 100 did however reach yet another intra-day record high in earlier trading, at 7,211.96 points, thanks to a weak pound which boosts share prices of multi-nationals listed on the index.
"The British economy continues to defy expectations," Chris Beauchamp, chief market analyst at IG trading group, said in response to another strong UK data release.
The latest Purchasing Managers' Index (PMI) for the nation's key services industry jumped in December to a 17-month peak at 56.2, data compiler IHS Markit revealed in a statement Thursday.
"Following the manufacturing and construction equivalents beating forecasts, today's release suggests that the UK economy is performing well," said XTB market analyst David Cheetham.
Elsewhere Thursday, Asian stock markets mostly drifted. Tokyo finished flat with the benchmark index losing early gains as Japan's currency strengthened against the dollar.
"After the Fed minutes... the focus shifts to the outlook for US jobs" data due Thursday and Friday, noted Beauchamp.
"The onus is now on the dollar bulls to prove that further advances in the greenback are warranted."
The Fed minutes added that Trump's pledge to slash taxes and ramp up infrastructure spending could boost demand above sustainable levels, "potentially necessitating somewhat tighter monetary policy than currently anticipated".
- Key figures around 1100 GMT -
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London - FTSE 100: FLAT at 7,191.42 points
Frankfurt - DAX 30: DOWN 0.1 percent at 11,574.64
Paris - CAC 40: FLAT at 4,899.16
EURO STOXX 50: DOWN 0.1 percent at 3,315.06
Tokyo - Nikkei 225: DOWN 0.4 percent at 19,520.69 (close)
Hong Kong - Hang Seng: UP 1.5 percent at 22,456.692 (close)
Shanghai - Composite: UP 0.2 percent at 3,165.41 (close)
New York - Dow: UP 0.3 percent at 19,942.16 (close)
Euro/dollar: UP at $1.0512 from $1.0493 Wednesday
Pound/dollar: DOWN at $1.2307 from $1.2323
Dollar/yen: DOWN at 116.46 yen from 117.27
Oil - West Texas Intermediate: UP 20 cents at $53.46 per barrel
Oil - Brent North Sea: UP 24 cents at $56.70 per barrel
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