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New York (AFP) – Wall Street stocks rallied and the dollar fell on Wednesday following a dovish Federal Reserve decision that followed solid earnings and US employment data.

Major US stock indices rose more than 1.5 percent after the Fed kept interest rates unchanged and signaled a cautious approach to future actions to tighten monetary policy that was more market-friendly than some analysts expected.

The moves came on a mixed day for global stocks as markets digested Tuesday’s votes in the British parliament that further muddied the waters on the country’s divorce from the European Union.

Fed Chairman Jerome Powell said the case for further rate hikes had “weakened somewhat” at a news conference following the central bank’s announcement.

“In this environment, we believe we can best support the economy by being patient in evaluating the outlook before making any future adjustment to policy,” Powell said.

The Fed also said it could adjust the pace of reduction of its massive securities holdings, after markets became concerned the current process was too rigid.

“What investors most like is that they got more than they expected” from the Fed, said Art Hogan, chief market strategist at National Securities.

The Fed’s statement and news conference offered “reassurance that investors don’t need to worry about monetary policy being reckless in regards to what’s going on in the global economy,” Hogan said.

The Dow finished 1.8 percent higher at 25,014.86, boosted also by better-than-expected earnings from Apple and Boeing and a solid ADP private-sector hiring report.

– Brexit chaos –

The US central bank’s stance pushed the dollar lower against major currencies including the British pound, which fell modestly against the euro a day after British lawmakers directed Prime Minister Theresa May to renegotiate the terms of the country’s divorce from the EU.

However, EU officials have refused to rewrite the agreement, increasing the odds that Britain will exit the bloc on March 29 without an agreement, a so-called “hard Brexit.”

“What the hell happens now?” queried a note from Eurasia Group that predicted that an extension of the deadline for negotiating terms of the divorce was the mostly likely outcome.

Minori Uchida, Tokyo head of global markets research at MUFG Bank, said market players “are still thinking that a hard Brexit will be avoided in the end,” but added: “the optimism is groundless”.

“Hard Brexit risks are still here,” he told AFP.

Investors are also eyeing US-China trade talks that opened in Washington, which are seeking to make progress on a months-long trade conflict that has contributed to a dimming global growth outlook.

Another key event later in the week will be the January US jobs report, which is expected to show a gain of 160,000 jobs with unemployment holding steady at 3.9 percent.

– Key figures around 2200 GMT –

New York – Dow: UP 1.8 percent at 25,014.86 (close)

New York – S&P: UP 1.6 percent at 2,681.05 (close)

New York – Nasdaq: UP 2.2 percent at 7,183.08 (close)

London – FTSE 100: UP 1.6 percent at 6,941.63 (close)

Frankfurt – DAX 30: DOWN 0.3 percent at 11,181.66 (close)

Paris – CAC 40: UP 1.0 percent at 4,974.76 (close)

EURO STOXX 50: UP 0.3 percent at 3,161.74 (close)

Tokyo – Nikkei 225: DOWN 0.5 percent at 20,556.54 (close)

Hong Kong – Hang Seng: UP 0.4 percent at 27,642.85 (close)

Shanghai – Composite: DOWN 0.7 percent at 2,575.58 (close)

Pound/dollar: UP at $1.3111 from $1.3066 at 2200GMT

Euro/pound: UP at 87.55 pence from 87.49 pence 

Euro/dollar: UP at $1.1483 from $1.1433 

Dollar/yen: DOWN at 109.02 yen from 109.40

Oil – Brent Crude: UP 33 cents at $61.65 per barrel

Oil – West Texas Intermediate: UP 92 cents at $54.23 per barrel

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