Euro­pean shares up, cau­tion reigns ahead of Fed

The Pak Banker - - MARKETS/SPORTS -

Shares were mixed and the dol­lar rose on Wed­nes­day as mar­kets awaited the out­come of the U.S. Fed­eral Re­serve's pol­icy meet­ing, seen leav­ing in­ter­est rates on hold but the door open for fur­ther in­creases later in the year.

In­vestors have wel­comed the eas­ing of the in­tense volatil­ity that swept through fi­nan­cial mar­kets in the first two months of the year, but are aware that calmer con­di­tions mean the Fed might be more in­clined to re­sume its pol­icy tight­en­ing soon.

That sup­ported the dol­lar, which gained most ground against the yen af­ter Bank of Ja­pan gov­er­nor Haruhiko Kuroda said the cen­tral bank had room to slash in­ter­est rates to around -0.5 per­cent from -0.1 per­cent at present.

Euro­pean shares bucked the trend in Asia, ris­ing in early trade thanks to a re­cov­ery in oil prices fol­low­ing two days of losses that had cul­mi­nated in a de­cline of around 5 per­cent.

In Bri­tain, in­vestors were eye­ing a bud­get pre­sen­ta­tion dur­ing which fi­nance min­is­ter Ge­orge Os­borne is ex­pected to cut pub­lic spend­ing and warn that the do­mes­tic econ­omy will not es­cape the global eco­nomic tur­bu­lence un­scathed.

"Given that stocks have been trad­ing near multi-week highs, more pru­dent play­ers in the mar­kets pared back some of their re­cent ex­po­sure ahead of the con­clu­sion to to­day's Fed­eral Re­serve rate meet­ing," said Michael Hew­son, chief mar­kets strate­gist at CMC Mar­kets.

"Hav­ing said that, to­day's oil re­bound has led to a slightly higher open this morn­ing in Europe."

In early Euro­pean trade, the FTSEuroFirst 300 in­dex of lead­ing shares was up 0.4 per­cent at 1,346 points .FTEU3. Ger­many's DAX was 0.7 per­cent higher, France's CAC 40 up 0.5 per­cent .FCHI and Bri­tain's FTSE 100 gained 0.4 per­cent .FTSE.

Oil prices man­aged a bounce af­ter data from in­dus­try group the Amer­i­can Pe­tro­leum In­sti­tute (API) showed U.S. crude stock­piles rose by less than half what an­a­lysts had ex­pected.

U.S. crude CLc1 gained 1.7 per­cent to $36.96 a bar­rel, while Brent LCOc1 rose 1.3 per­cent to $39.27, lift­ing re­sources stocks. Shares in BP (BP.L) were up 2 per­cent.

In Asian trad­ing, MSCI's broad­est in­dex of Asia- Pa­cific shares out­side Ja­pan .MIAPJ0000PUS edged down 0.1 per­cent, and Ja­pan's Nikkei .N225 took a knock from an ini­tial rise in the yen and fell 0.8 per­cent. MSCI's global share in­dex was last down 0.1 per­cent, while U.S. fu­tures pointed to a slen­der rise of 0.1 per­cent at the open on Wall Street ESc1.

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