European shares rise as Fed modestly cuts stimulus

PARIS Thu Dec 19, 2013 3:12am EST

PARIS Dec 19 (Reuters) - European shares rose early on Thursday, mirroring sharp gains on Wall Street after the U.S. Federal Reserve said it would modestly trim its stimulus programme and recommitted to low interest rates.

Shares in Saab AB were the top gainers in Europe, jumping 24 percent after Brazil awarded a $4.5 billion contract to Saab to supply the country's air force with 36 new Gripen NG fighters by 2020.

Deutsche Telekom also rallied, up 2.3 percent after sources told Reuters U.S. group Dish was considering making a bid for T-Mobile US, majority owned by Deutsche Telekom.

At 0809 GMT, the FTSEurofirst 300 index of top European shares was up 1.2 percent at 1,274.36 points

Investors took the Fed's decision to trim its bond buying by $10 billion to $75 billion a month as a modest step and one the U.S. economy could easily withstand, while the central bank also made its forward guidance more dovish.

Tempering the long-awaited cut in the its massive asset purchasing programme, the Fed suggested its key interest rate would stay at rock bottom even longer than previously promised.

Following the Fed's decision, the Dow Jones industrial average surged 1.8 percent and the S&P 500 gained 1.7 percent, both hitting record closing highs.