UK stocks hit record high; eurozone markets advance

The British stock market rallied Thursday to a record peak, propelled by optimism over the government's budget and after the US Federal Reserve cooled rate hike expectations.

Most eurozone stock markets edged higher but Athens fell sharply as investors awaited an EU summit for fresh news on the Greek debt crisis.

In morning deals, London's benchmark FTSE 100 index soared to a record-high 6,982.79 points, building on gains won the previous day after the British government's upbeat budget. The FTSE later stood at 6,954.60 points, up 0.14 percent from Wednesday.

The CAC 40 index in Paris won 0.09 percent to 5,037.70 points and Frankfurt's DAX 30 index added 0.07 percent to 11,931 points.

"After loitering in the shadows of its more impressive US and eurozone peers of late, the FTSE had its moment to shine this morning following the double-whammy hit of (the) positive UK Budget and US Fed statements," said Spreadex analyst Connor Campbell.

"Yet the UK index has slipped away from this new record as the morning continued, suggesting these levels may not currently be sustainable."

The Fed, after a closely watched two-day meeting, issued a statement Wednesday that had removed a pledge to remain "patient" on raising rates, signalling a possible mid-year rate increase.

At the same time, however, Fed chief Janet Yellen stressed that while jobs were picking up the economy was more muted than three months ago. She added that consumer spending has slipped, inflation slowed, wages were flat, and the stronger dollar has hurt US exports.

In reaction, the European single currency surged to a two-week high of $1.1043 late on Wednesday. It pulled back to stand at $1.0688 in London morning deals on Thursday.

"As many suspected, the Federal Reserve removed from its statement a pledge to be 'patient' in tightening monetary policy," wrote analysts at foreign exchange traders MoneyCorp.

"That would probably have been positive for the dollar had the Fed chairperson not then poured buckets of cold water on investors' rate expectations."

The euro has rebounded sharply this week after collapsing on Monday to a 12-year low of $1.0458 on the back of the European Central Bank's vast quantitative easing stimulus.

Elsewhere Thursday, Greece's ATHEX composite index was the worst performing European market, diving 1.20 percent to 729.12 points before an eagerly awaited summit in Brussels.

Greece's Prime Minister Alexis Tsipras will plead with European counterparts to release vital funds to help his debt-laden country stave off a looming cash crunch.

European Union leaders will also debate whether to extend economic sanctions against Russia over the conflict in Ukraine beyond July, although it is likely they will delay the decision until later in the year.

"With Greek debt again in focus ahead of the EU summit the potential for volatility remains," cautioned Andy McLevey, head of dealing at broker Interactive Investor.