Stocks rally with Fed closer to tapering emergency support

Equities have won back ground from last week's sharp falls, thanks also to easing concerns over troubled Chinese property giant Evergrande.

Stocks had tumbled over fears that the group could collapse, leading to possible contagion around the world.

Ratings agency Fitch on Thursday cut its growth forecast for China's economy this year, citing a slowdown in the country's colossal property sector.

But focus remained firmly on central banks, with the Bank of England keeping rates and stimulus measures in place at its own meeting Thursday.

It comes a day after the Fed said it expects to "soon" be ready to start tapering stimulus put in place at the start of the pandemic via bond purchases -- a key driver of the global economic and equity rebound.

London's stock market fell slightly, while the pound rose.

Across the Atlantic, Wall Street opened higher, with the Dow Jones Industrial Average and tech-heavy Nasdaq both gaining in early trades.

The dollar weakened on profit-taking.

"US stocks are extending yesterday's solid rebound from Monday's tumble, with the markets continuing to digest yesterday's Fed monetary policy decision," Charles Schwab analysts wrote.

Looking ahead, "markets are volatile amid the flared-up real estate debt concerns out of China, Fed tapering expectations... and the continuing stalemate among lawmakers on whether to raise the debt ceiling" in Washington, they added.

"The Delta variant (of coronavirus) and supply chain challenges continue to fester".

Fed chief Jerome Powell warned US lawmakers to lift the country's debt ceiling to avoid the government running out of cash and failing to service its debt obligations, which could lead to a default and spark a financial crisis.

In Asia, Hong Kong closed up more than one per cent, with Evergrande's share price surging by around one-quarter.