Dollar firms on Fed rate hike talk, Trump spending pledge

Dollar firms on Fed rate hike talk, Trump spending pledgeThe dollar rose Wednesday after two top Federal Reserve officials suggested US interest rates could rise this month, while Donald Trump's speech to Congress boosted European stocks.

In Washington, President Trump's much-anticipated address to both houses of Congress was short on detail but provided enough to keep traders mainly upbeat.

The tycoon pledged $1.0 trillion in public-private infrastructure spending and "massive" tax cuts for the middle class, but he did not say how any of it would be paid for.

In European trade, London stocks rallied to stand 0.9-percent around the half-way stage, while Frankfurt and Paris each scored gains of approximately 1.5 percent in value compared with Tuesday's closing levels.

"Equities are embracing a more Presidential Trump whose congressional address offered just enough to rekindle bullishness -- infrastructure, defence spend, tax breaks -- even if detail was distinctly lacking," said Mike van Dulken, head of research at Accendo Markets.

"A stronger US dollar, after hawkish comment from the Fed's Dudley is also offering helpful weakness in the pound and euro to boost the FTSE and DAX."

Investors shifted into the US unit after New York Fed president William Dudley said there was a strong case for borrowing costs to rise, while his San Francisco counterpart John Williams expects such a move to get "serious consideration" when the bank meets this month.

'Trump rally'

The greenback's rally also provided fresh impetus for Tokyo stocks, but Asia's regional markets were subdued despite forecast-beating readings on Chinese factory activity and Australian growth.

Markets have surged since Trump's November election victory on expectations his plans for infrastructure spending and tax cuts would fire up the world's top economy.

However, his lack of clarity in recent weeks has led to some uncertainty, while there are also concerns the presidency has been enveloped with controversy that has caused division in the country.

Sydney stocks shed 0.1 percent as traders brushed off news Australian growth hit 1.1 percent in the October-December quarter, averting a technical recession of two-straight quarters of contraction, thanks to a pick-up in exports and household spending.

There was little reaction to Chinese figures showing manufacturing activity grew more than expected last month.

The improvement in the purchasing managers index follows a series of upbeat readings from Beijing that suggest the world's number two economy may have turned a corner after years of slowing growth.

Key figures around 1115 GMT

London - FTSE 100: UP 0.9 percent at 7,331.69 points

Frankfurt - DAX 30: UP 1.5 percent at 12,005.77

Paris - CAC 40: UP 1.5 percent at 4,931.08

EURO STOXX 50: UP 1.7 percent at 3,374.56

Tokyo - Nikkei 225: UP 1.4 percent at 19,393.54 (close)

Hong Kong - Hang Seng: UP 0.2 percent at 23,776.49 (close)

Shanghai - Composite: UP 0.2 percent at 3,246.93 (close)

New York - Dow: DOWN 0.1 percent at 20,812.24 (close)

Euro/dollar: DOWN at $1.0537 from $1.0579

Pound/dollar: DOWN at $1.2372 from $1.2440

Dollar/yen: DOWN at 112.29 yen from 112.70 yen

Oil - Brent North Sea: UP 26 cents at $56.77 per barrel

Oil - West Texas Intermediate: UP 20 cents at $54.21