LONDON: Global stock markets advanced Thursday after the Federal Reserve said it would this month start tapering its pandemic support programme.
London equities also pushed ahead before an interest rate decision from the Bank of England at 1200 GMT, with economists predicting a close call over a possible hike to borrowing costs despite soaring inflation.
The dollar traded mixed while the pound wavered.
Oil rebounded from recent losses, with traders awaiting an output gathering of OPEC and other key producers.
The Fed on Wednesday said it would start reducing the monthly pace of quantitative easing (QE) stimulus purchases by $10 billion for Treasuries and $5 billion for mortgage-backed securities.
The announcement fuelled another record rally on Wall Street, and bumper gains across Asia.
The US central bank added it would be patient in hiking interest rates as the world's biggest economy continues to recover, insisting once more that surging inflation was transitory.
"This QE tapering has been very well communicated and surprised no one," SEB chief economist Jens Magnusson told AFP.
"There was a fear that the $15 billion decrease per month could have been $20 billion or $25 billion, and there was also a risk of a more hawkish rate message.
"As it turned out, everything was in line with expectations with no scary surprises and sometimes that's all it takes for stock markets to be happy."
The announcement brought to an end months of speculation about the bank's plan for the bond-buying programme, and removed some unease among traders who were concerned that officials were leaving it too late to respond to rocketing inflation.
The Fed is the latest bank to move away from its emergency measures and it comes after rate hikes in several countries including Canada and South Korea.
It also makes the Fed the latest monetary authority to begin winding back the measures put in place at the start of the pandemic which have been crucial to the global rebound and an 18-month equity rally to multi-year or record highs.
At the same time, supply bottlenecks and shortages have caused global consumer prices to rise, prompting criticism that the Fed and other central banks have become overly complacent about inflation risks.
The Bank of England will meanwhile reveal its latest rate decision at midday on Thursday, amid talk of a rate hike to dampen soaring inflation, and it could also taper its stimulus.
Banks power European stocks to record highs
The bank may hike borrowing costs from a record-low 0.1 percent to 0.25 percent as the UK annual inflation rate looks set to reach more than double its target in the coming months.
"Whether today or next month, the BoE is about to embark on a tightening cycle to combat high inflation," Oanda analyst Craig Erlam told AFP.
"But they're not alone. Central banks around the world are taking a similar approach, withdrawing emergency pandemic measures and turning their attention to inflation which has already proven itself to be a bigger, less temporary problem than they all assumed."
Key figures around 1100 GMT
London - FTSE 100: UP 0.2 percent at 7,265.88 points
Frankfurt - DAX: UP 0.4 percent at 16,022.86
Paris - CAC 40: UP 0.4 percent at 6,974.64
EURO STOXX 50: UP 0.4 percent at 4,326.87
Tokyo - Nikkei 225: UP 0.9 percent at 29,794.37 (close)
Hong Kong - Hang Seng Index: UP 0.8 percent at 25,225.19 (close)
Shanghai - Composite: UP 0.8 percent at 3,526.87 (close)
New York - Dow: UP 0.3 percent at 36,157.58 (close)
Euro/dollar: DOWN at $1.1547 from $1.1612 at 2100 GMT Wednesday
Dollar/yen: DOWN at 113.94 from 114.01 yen
Pound/dollar: DOWN at $1.3629 from $1.3687
Euro/pound: DOWN at 84.71 pence from 84.83 pence
Brent North Sea crude: UP 1.8 percent at $83.43 per barrel
West Texas Intermediate: UP 1.5 percent at $82.06 per barrel
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