European stocks steady, euro rises
European stock markets were mixed yesterday amid hopes the US Federal Reserve would announce more stimulus to boost the world’s biggest economy and as a government emerged in crisis-stricken Greece.
The European single currency rose against the dollar as traders also digested the outcome of a G20 summit aimed at stamping out fires in the 17-nation eurozone.
At the close, London’s benchmark FTSE 100 index added 0.64 per cent to 5,622.29 points. In Frankfurt, the DAX 30 rose 0.45 per cent to 6,392.13 points, while in Paris the CAC 40 gained 0.28 per cent to 3,126.52 points.
In Madrid, the Ibex-35 rose 1.53 per cent to 6,796.10 points and in Milan the FTSE MIB rose 2.13 per cent to 13,732 points.
In midday trade on Wall Street, the Dow Jones Industrial Average was down by a slight 0.06 per cent and the S&P 500-stock index had slipped 0.12 per cent, while the tech-rich Nasdaq fell 0.12 per cent.
Asian markets mostly climbed, with Tokyo closing up 1.11 per cent and Hong Kong ending 0.53 per cent higher.
In foreign exchange deals, the euro rose to $1.2702 from $1.2686 late on Tuesday in New York. The US dollar rose to 79.47 Japanese yen from 78.94 yen.
Investors were treading carefully, “lest they are caught out this evening by a Fed statement that confounds expectations,” said Chris Beauchamp, a market analyst at IG Index trading group.
All eyes were on Washington, where the Fed was to close a two-day meeting that many expect to end with a fresh injection of capital to shore up the US economic recovery as jobs growth slows.
Some economists said policymakers could use a third round of asset purchases known as quantitative easing (QE3) or use other tools at their disposal.
Recent comments from central bank officials have offered mixed signals about possible actions, while Fed chairman Ben Bernanke kept his cards close to his chest in his latest testimony to Congress.
“As the global economy teeters on the brink... the hope for many is that... Ben (Bernanke) and his band of policymakers at the Fed will unleash a new round of stimulus, or at the very least tweak their statement to make it more accommodative,” said Mr Beauchamp.
“We had an appetiser to the Fed meeting, when the Bank of England published the minutes of its latest policy meeting.”
It was revealed yesterday that in early June BoE policymakers narrowly voted against pumping the UK’s economy with more new cash under its own QE programme.