(AGI) Milan, Sept 18 - European markets dropped on Friday afterthe U.S. Federal Reserve's decision to leave interest ratesunchanged. The stock market in Milan fell by just over 2percent, while Frankfurt and Paris lost almost 3 percent. TheFed opted to remain cautious, leaving interest rates betweenzero and 0.25 percent, the level at which they have been fixedsince December 2008. "The economy has been performing well, andwe expect it to continue to do so," Fed Chair Janet Yellen saidon Friday. "But in light of the developments that we have seenand the impacts on financial markets, we want to take a littlebit more time to evaluate the likely impacts on the UnitedStates," she added. The euro rose against other currencies to1.1398 dollars and 136.39 yen, penalising stocks from companiesin the export sector. The market opened with London alreadydown by 0.49 percent, Paris by 1.04 percent, Frankfurt 0.85percent, and Milan by 0.53 percent, and stocks fell over theday. Investors were concerned by both the Fed's negativepredictions for the world economy - especially China anddeveloping nations - and uncertainty over a possible decisionto raise interest rates in the upcoming months. The CEO ofItalian bank Unicredit, Federico Ghizzoni, said of the Feddecision: "Personally I expected them to postpone the decisionto later. The desire to mantain stability on the markets, giventhe trouble with developing nations, probably prevailed."China, on the other hand, welcomed the U.S. central bank'sdecision. The Xinhua agency defined it a "temporary relief" forgrowing economies, including China, while the China Daily saidit will serve to ease pressure on the yuan and prevent capitalflight from the country. Chinese stock markets closed higher,with Shanghai rising by 0.38 percent to 3097.92 points afteropening at plus 0.46 percent, and Shenzhen gaining 1.14percent. Hong Kong also closed higher after gaining 0.35percent by mid-afternoon. Tokyo closer 1.96 percent lower.. .