Eurozone stock markets rose yesterday ahead of a key EU summit, with the smart money on Britain winning a Brexit delay which analysts said would be welcomed by equity investors.
But there was some nervousness about a possible US-EU trade war after a tariff threat by Washington.
Meanwhile, the European Central Bank held key interest rates at historic lows at a regular policy meeting yesterday.
At a news conference, bank chief Mario Draghi warned of risks weighing on eurozone growth prospects but dismissed fears of a recession. He also said it was too early to take steps to help out banks whose profit margins have been squeezed by negative interest rates.
The next big item on the monetary policy agenda is the release of minutes from the US Federal Reserve’s latest meeting.
The London stock market lagged behind its eurozone peers as the pound strengthened, typically eating into profits of London-listed multinationals with major earnings in other currencies.
Sterling benefited from the view that a Brexit delay would reduce the chances of a “hard” British exit from the European Union which would be expected to have dire economic consequences.
The currency shrugged off news that the UK economy grew by just 0.2 per cent in February from a month earlier.
Analysts have dubbed the combination of the EU summit, the ECB decision and the Fed minutes “Super Wednesday”, making for “anything but a boring day in the markets”, as Oanda analyst Craig Erlam put it.
“Today is the day we have all been waiting for; the reason why markets have been so subdued at the start of the week,” he said.
European and US equities had fallen Tuesday amid a flare-up in trade tensions between Washington and Brussels.
United States President Donald Trump has threatened to impose tariffs on billions in European imports in retaliation over subsidies to aviation giant Airbus.
The warning from Mr Trump’s administration that it would impose levies on more than $11 billion of European imports jolted investors.
Airbus stock was steady in the European afternoon on the first day under new chief executive Guillaume Faury.