A dealer reacts on the trading floor at financial spread betting company IG Index in the City of London. The benchmark FTSE 100 index ended yesterday up 1.23% at 6,672.66 points.

AFP/London

European stock markets enjoyed solid gains yesterday after new Federal Reserve Chair Janet Yellen told Congress she had no plans to change the monetary policy set under predecessor Ben Bernanke.

The gains suggested the market was reassured by Yellen’s statement that she expects “a great deal of continuity” in Fed policy and would continue to slowly reel in its huge stimulus.

“In short, recent data and events have not changed the Fed’s game plan. A smooth transition from the Bernanke era,” summed up Jim O’Sullivan, chief US economist at High Frequency Economics.

There were however falls for blue-chip companies, including British bank Barclays and French cosmetics giant L’Oreal.

In London, the benchmark FTSE 100 index ended the day up 1.23% at 6,672.66 points.

Frankfurt’s DAX 30 rallied 2.03% to 9,478.77 points, while the CAC 40 in Paris added 1.09% to 4,283.32 points.

US stocks Tuesday also moved higher after Yellen spoke to Congress.

In midday trade, the Dow Jones Industrial Average rose 0.83% to 15,932.35 points.

The broad-based S&P 500 added 0.75% at 1,813.30, while the tech-rich Nasdaq Composite Index advanced 0.60% to 4,173.18.

In foreign exchange trade yesterday, the European single currency climbed to $1.3659 from $1.3642 late in New York on Monday.

The euro dipped to 82.93 British pence from 83.17 pence, while the pound rose to $1.6469 from $1.6401.

The price of gold hit a three-month high at $1,287.80 an ounce on the London Bullion Market. It later stood at $1,282 an ounce, up from $1,277 on Monday.

In the British capital, all eyes were on Barclays, whose share price tumbled 3.75% to 264.70 pence after the banking giant revealed a loss at its investment arm.

Barclays said it will axe thousands of jobs but raise bonuses for its investment bankers this year, after posting a return to annual profits for the group overall.

Shares in Thomas Cook fell 1.29% to 183 pence. The British travel group said it had trimmed losses in its first quarter as deep cost-cutting offset a fall in sales caused by political turmoil in Egypt.

In Paris, L’Oreal slid 3.26% to 124.8 euros after announcing that Swiss food giant Nestle is to sell a chunk of its shares in the company.

While the sale was interpreted as a sign that Nestle had dropped the option of a takeover of L’Oreal, the head of the Swiss company said it viewed its stake in world’s top cosmetics company as a strategic investment.

In Germany, car groups soared on solid annual results. Daimler rose 3.69% to €65.53 and BMW jumped 2.99% to €84.45.