European stocks edge higher before ECB meeting

LONDON Thu Dec 6, 2012 2:20pm IST

1 of 2. A trader sits in front of computer screens at the stock exchange in Madrid July 6, 2012.

Credit: Reuters/Andrea Comas

Related Topics

LONDON (Reuters) - Stocks in Europe extended a week-long rally on Thursday while the euro slipped as investors awaited a European Central Bank policy meeting for signs of any future interest rate cuts.

The ECB is expected to keep its benchmark rate at 0.75 percent. However, markets are looking for clues on whether the deepening recession across the euro zone will prompt President Mario Draghi to signal a further easing in policy.

European stocks covered by the FTSE Eurofirst 300 index, which hit its highest level for the year this week, edged up 0.2 percent to 1,126.13 points in early trade. London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX were as much as 0.35 percent higher.

The MSCI world equity index, which has risen over 11 percent this year, added 0.1 percent, helped by further strong gains in Asia-Pacific shares outside Japan that are trading near a 16-month high.

"The momentum is positive for equity markets, which remain cheap compared with credit and government bonds," said Frederic Jamet, head of management at State Street Global Advisors France.

Signs of renewed growth in the United States and a possible end to the slowdown of China's economy have supported world equity markets this week. However, a lack of progress in Washington in talks to avoid the "fiscal cliff" of spending cuts and tax rises starting in January is limiting the gains.

Financial markets were reassured on Wednesday by a statement from U.S. President Barack Obama that a deal was possible in "about a week" if Republicans compromise on taxes.

The lack of a breakthrough so far was supporting safe haven government bonds, lifting the main German bund future contract 5 ticks to 143.33. Ten-year 10-year U.S. Treasury yields are hovering near a three-week low at 1.59 percent.

In the European bond market investors were focused on an auction of new French government paper later, which should see good demand due to higher yields than on German debt, but could reflect growing concerns about the outlook for France's economy.

The euro, which hit a seven-week high of $1.3127 on Wednesday, was down about 0.15 percent at $1.3045.

Gains in crude oil and other commodity markets were being checked by niggling worries about the outlook growth in the global economy before Friday's release of the U.S. non-farm payrolls report for November.

U.S. crude futures eased 0.15 percent to $87.74 a barrel while Brent steadied around $108.82.

"Overall, the markets are weak with the global economic concerns and will be trapped in a range until the U.S. 'fiscal cliff' issue is behind us," said Tony Nunan, an oil risk manager with Mitsubishi Corp in Tokyo.

Spot gold edged down 0.3 percent to $1,687.74 an ounce, nearing its one-month low of $1,684.40 hit in on Wednesday after a weaker price forecast by Goldman Sachs.

(Reporting by Richard Hubbard; editing by David Stamp)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

RBI Policy Review

RBI Policy Review

RBI keeps rates on hold, warns on inflation  Full Article 

China iPhone Sale

China iPhone Sale

China regulator approves Apple's iPhone 6 for sale in China  Full Article 

Cleanliness Drive

Cleanliness Drive

Modi orders officials to clean loos on Gandhi's birthday.  Full Article 

Bid to Boost Trading

Bid to Boost Trading

RBI takes small steps to deepen markets.  Full Article 

Car Recall

Car Recall

Maruti Suzuki says to recall 69,555 cars.  Full Article 

China Factory Data

China Factory Data

China final HSBC PMI steady in September on stronger global demand but risks remain  Full Article 

Oil Demand

Oil Demand

India's thirst for oil grows even as China cuts back  Video 

EBay Divests PayPal

EBay Divests PayPal

EBay to spinoff PayPal in 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage