German DAX hits record high as automakers rally

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March 18 (Reuters) - Automakers lifted the German DAX to a record high on Thursday, while euro zone blue-chip stocks jumped to pre-pandemic levels after the U.S. Federal Reserve vowed to keep interest rates low despite forecasting a surge in economic growth.

An index of euro zone’s top 50 companies gained 0.3% in early trading, briefly surpassing its peak hit in February last year before the COVID-19 pandemic hammered financial markets.

Germany’s blue-chip DAX rose 0.7%, France’s CAC 40 was up 0.2%, while UK’s FTSE 100 slipped 0.1% ahead of the Bank of England’s monetary policy decision due later in the day.

The wider pan-European STOXX 600 rose 0.3% and was trading less than 2% below its all-time high.

With the 10-year U.S. Treasury yield rising in after the Fed decision, economically sensitive sectors such as automakers, banks, miners and travel & leisure led the gains in Europe.

Volkswagen jumped 6.1%, sealing its position as the most valuable company in Germany’s DAX after it overtook software maker SAP on Wednesday.

Sectors considered as bond-proxies such as utilities , food & beverage and healthcare stocks were trading lower.

Reporting by Sruthi Shankar and Devik Jain in Bengaluru; Editing by Arun Koyyur