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

Market Eye

Sensex, Nifty rise to second consecutive record high

Sensex, Nifty rise to second consecutive record high

The BSE Sensex and Nifty on Friday rose to their second consecutive record highs. The 30-share Sensex surged as much as 1.52 percent to an all-time high of 27,762.13. The broader Nifty gained as much as 1.49 percent to a record of 8,291.65.  Full Article 

REUTERS SHOWCASE

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Leisure Riding

Leisure Riding

Harley-Davidson woos affluent young Indians with bike culture  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

Reuters India Mobile

Reuters India Mobile

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