Portugal Colonial - Global stocks rally as Fed hikes interest rates

Optimism over talks between Russia and Ukraine also buoyed equities, analysts said, even as Ukrainian President Volodymyr Zelensky implored US lawmakers for more help to counter Moscow.

Wall Street stocks capped a banner day for global equities, with the S&P 500 piling on more than two percent as the Fed escalated its battle against the wave of price increases battering the American economy.

The Fed's first interest rate hike since 2018 marks an effort to counter spiking consumer prices even as Russia's invasion of Ukraine introduces new uncertainty in an economy battered by supply chain snarls and labor shortages.

Fed Chair Jerome Powell expressed confidence the world's largest economy could withstand the tightening of monetary policy, even as the central bank trimmed its growth forecast for 2022.

"We're not going to let high inflation become entrenched. The costs of that would be too high," Powell told reporters, adding the Fed is committed to using its "powerful tools" to prevent that.

- Fed doesn't surprise -

Art Hogan, chief strategist at National Securities, said the Fed's message was consistent with market expectations, meaning the interest rate hike had already been priced in.

He said markets also continued to gain strength from a significant pullback in oil prices, which had "got ahead of" themselves by surging shortly after Russia invaded Ukraine.

Earlier, Hong Kong's main equities index closed up more than nine percent after Chinese state media said authorities would maintain capital market stability and adopt measures to handle risks for troubled property developers.

The news lit a fire under the Hang Seng Index, where mainland Chinese tech firms had been reeling from a sell-off this year fueled by a government crackdown on the sector and fears about possible US sanctions if China were to help Russia in its war with Ukraine.

Frankfurt, Paris and Milan stock markets closed more than three percent higher while London's FTSE 100 finished up 1.6 percent.

"Today has delivered a double-whammy of gifts for embattled markets," said Chris Beauchamps, chief market analyst at IG.

"First the Chinese deputy PM hints at economic stimulus, providing a huge bounce for stocks there and giving the rest of the world hope that a sizeable economic package is on the way," he said.

"As if that wasn't enough, the Russians and Ukrainians appear to be making some progress towards a deal, including a ceasefire and Ukraine halting any lingering efforts to join NATO."

On Wednesday, however, Kyiv rejected Russian demands to impose neutrality on Ukraine, and Zelensky called on Washington and its NATO allies to impose a no-fly zone in an address to the US Congress.

"The positive disposition is being attributed to reports that Russia and Ukraine may be making progress toward some compromises," said Briefing.com analyst Patrick O'Hare.

"Everyone has heard this before only to be subsequently disappointed with headlines later in the day that dispel such notions," he said.

- Key figures around 2100 GMT -

New York - DOW: UP 1.6 percent at 34,063.10 (close)

New York - S&P 500: UP 2.2 percent at 4,357.86 (close)

New York - Nasdaq: UP 3.8 percent at 13,436.55 (close)

London - FTSE 100: UP 1.6 percent at 7,291.68 (close)

Frankfurt - DAX: UP 3.8 percent at 14,440.74 (close)

Paris - CAC 40: UP 3.7 percent at 6,588.64 (close)

EURO STOXX 50: UP 4.1 percent at 3,889.69 (close)

Hong Kong - Hang Seng Index: UP 9.1 percent at 20,087.50 (close)

Tokyo - Nikkei 225: UP 1.6 percent at 25,762.01 (close)

Shanghai - Composite: UP 3.5 percent at 3,170.71

Brent North Sea crude: DOWN 1.9 percent at $98.02 per barrel

West Texas Intermediate: DOWN 1.5 percent at $95.04 per barrel

Euro/dollar: UP at $1.1038 from $1.0956 late Tuesday

Pound/dollar: UP at $1.3148 from $1.3042

Euro/pound: DOWN at 83.90 pence from 84.00 pence

Dollar/yen: UP at 118.73 yen from 118.30 yen

G.Machado--PC