| LONDON, March 13
LONDON, March 13 An event-packed week for global
markets got underway on Monday with stocks steady and the dollar
recovering from a three-day fall as investors braced for a
potential interest rate hike in the United States, a Dutch
election and the first G20 finance ministers' meeting of the
Strong U.S. employment data and talk that European Central
Bank policymakers had begun thinking about how to raise interest
rates as inflation returns saw market participants, particularly
in bond and currency markets, start to price in higher borrowing
Buying from the start of European trade on Monday halted
three days of losses for the dollar which gained against both
the euro and a basket of currencies.
Fed fund futures prices showed investors pricing in more
than a 90 percent chance of an increase in U.S. overnight
interest rates and the market's attention is now firmly on the
scale of tightening further out.
"Improved growth and inflation prospects are allowing
developed market central banks to sketch their exits from
extreme accommodation at varying speeds," David Folkerts-Landau,
group chief economist at Deutsche Bank wrote in a note to
Sterling rose 0.4 percent against the dollar,
however, ahead of a vote in Britain's lower house of parliament
on legislation that will give the government permission to
trigger Britain's exit from the European Union.
"The push and pull between solid growth momentum and
political risks look set to continue in the near-term,"
The world's most powerful finance ministers and central
bankers convene in the German spa town of Baden-Baden on March
17-18, their first meeting since Donald Trump's U.S. election
victory in November where his protectionist stance on
international trade is likely to be a key issue.
Gains in mining stocks and continued corporate deal-making
activity helped European shares offset weakness in oil-related
shares, with the benchmark STOXX 600 up 0.2 percent in
The FTSE 100 was up slightly where along with mining
blue chips a 1 percent gain for shares of HSBC
supported the index.
HSBC shares rose after Europe's biggest bank tapped an
outsider, Mark Tucker, for its top job.
In bond markets, euro zone government bond yields pulled
back from multi-week highs, as nervous investors turned their
focus to this week's Dutch parliamentary elections -- the next
key gauge of populism in Europe.
Although the risk of a eurosceptic party coming to power in
the Netherlands is small, a strong election performance could
renew concerns about the popularity of the far-right in French
presidential elections in April and May, said Erin Browne, head
of macro investments at UBS O'Connor, a hedge fund manager
within UBS Asset Management.
"If you see a eurosceptic party gains a significantly larger
share of the vote than current polls suggest that could spill
over into concern about the French elections and the National
Front doing better in the second round of voting than is
currently being predicted," she said.
"That's the risk for markets with a view to the Dutch
A sharp pullback in oil prices which fell to their lowest in
three months and are on track for a fifth day of losses also
kept investor confidence in check.
The slump in prices has occurred as more rigs are deployed
to look for oil in the United States and as crude inventories in
the United States, the world's biggest oil consumer, have surged
to a record.
(Reporting by Vikram Subhedar; Editing by Toby Chopra)