Paris: News that the US economy grew by more than previously thought in the third quarter shored up global markets on Friday and sent the main US indexes up to record highs.

The US government figures showed that the world’s largest economy grew by an annualized rate of 4.1% in the third quarter, up from the previous estimate of 3.6%. The pace of growth is further evidence that the US economy is gaining traction and helps explain why the US Federal Reserve decided to reduce its stimulus by $10 billion a month starting from January.

In the US, the S&P 500 added 0.7% to a record 1,822.11 at 1:51pm in New York. The Dow Jones Industrial Average rose 94.98 points, or 0.6%, to 16,274.06, also an all-time high. Trading in S&P 500 stocks was 24% above the 30-day average during this time of the day as the operator of the S&P 500 rebalances the index in a quarterly move to adjust member weightings.

Mindful of the impact on markets, the Fed also emphasized on Wednesday that its main interest rate would remain low until US unemployment falls below 6.5%. It’s now 7%. That commitment has helped support stock markets since despite concerns among investors about the potential impact of the stimulus reduction—over the past few years, the stimulus has been key reason behind the bounce back in stocks.

“These gains may continue in the coming weeks, although with the holiday season now upon us, trading volumes will be significantly reduced," said Craig Erlam, market analyst at Alpari. “The economic calendar will also provide less direction for the markets, making any significant moves unlikely."

In Europe, the FTSE 100 index of leading British shares closed up 0.3% at 6,606.58 while Germany’s DAX rose 0.7% to 9,400.18. The CAC-40 in France ended 0.1% higher at 4,193.77. In the US, the Dow Jones industrial average was up 0.5% at 16,265, while the broader S&P 500 index rose 0.6% to 1,821.

In Asia, in particular, investors are also monitoring developments in China, and specifically whether the country’s monetary authorities will be able to prevent a new cash crunch at its banks.

The People’s Bank of China moved late on Thursday to inject liquidity after the interbank market showed stress, but concerns over a repeat of the summer’s credit crunch weighed on the market. That weighed on the performance of a number of markets in Asia.

China’s Shanghai composite dropped 2.0% to 2,181.94 on fresh concerns of a shortage of credit. Hong Kong’s Hang Seng index also fell 0.3% to 22,812.18.

Elsewhere in Asia, Japan’s Nikkei index recovered some early losses near a six-year peak at 15,837.31 as investors welcomed the continued weak yen, which is expected to boost exports.

The dollar has largely been ascendant since the Fed’s decision as traders price in the prospect of less new money being created. The dollar is trading 0.3% lower at 104.01 yen, having earlier risen to a five-year high of 104.64 yen. The euro recouped some ground, trading 0.3% higher at $1.3677 even though Standard & Poor’s downgraded the European Union’s credit rating. AP

Kay Johnson in Mumbai and AFP contributed to this story

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