European stocks rose on Thursday in a broad-based rally after the US Federal Reserve signalled a less aggressive timeline for raising interest rates.

At 0855 GMT, the FTSEurofirst 300 index of top European shares was up 0.5 per cent at 1,598.71 points, after hitting a new 7-1/2 year high earlier in the session.

Britain’s FTSE 100 hit a record high of 6,982.79 points, beating its previous peak of 6,974.26 points set on March 2.

The Fed removed the word “patient’’ from its statement in terms of raising interest rates, as expected, but also downgraded its views on the economy and inflation and lowered its interest rate trajectory. That signalled a far more gradual path to policy normalisation than many investors had foreseen.

“(Fed Chair Janet) Yellen keeps some room for manoeuvre. Lowering the outlook made sense given the rise in the dollar and a recent batch of disappointing macro data,’’ said Lazard Freres Gestion strategist Julien-Pierre Nouen.

The tone from the Fed sent the dollar dropping and the euro surging on Wednesday, although the euro fell back on Thursday, trading at $1.0660.

Euro zone stocks, especially Germany’s DAX, have rallied strongly in the past few months as investors bet that a lower euro would boost the region’s economy and corporate earnings.

The DAX, home of some of the euro zone’s biggest exporters, underperformed on Thursday, and was down 0.2 per cent.

Shares in Enel rose 2.4 per cent after the Italian utility said it aims to raise profits and dividends over the next five years by focusing on emerging markets and green energy after it posted an 84 per cent drop in 2014 net profit due to writedowns.

Shares in British clothing retailer Next featured among the top losers in Europe after the company gave a cautious outlook for the 2015-16 year.

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