European equities wobble as dealers pause

The Bank of England is widely expected to keep its key lending rate at a record low 0.50 percent
AFP

London (AFP) – Europe’s main stock markets wobbled on Thursday, despite gains elsewhere, as dealers paused for breath following bumper gains so far this week.

In late morning deals, London’s benchmark FTSE 100 index dipped 0.1 percent in cautious trade before an interest rate decision from the Bank of England (BoE).

The British central bank is widely expected to keep its key lending rate at a record low 0.50 percent, where it has stood since March 2009.

In the eurozone, Frankfurt’s DAX 30 index added almost 0.2 percent, while the Paris CAC 40 nudged nearly 0.1 percent lower.

Asian and European stocks had churned higher Wednesday on strong Chinese trade data, building on the previous day’s solid gains driven by soaring oil prices, with the FTSE hitting its best level of 2016.

“After touching the highest level of the year in yesterday’s trade, this morning the FTSE 100 has pared back some of the gains ahead of the Bank of England rate decision,” said analyst David Cheetham at London-based brokerage XTB.

– Money off table? –

“Whilst the vast majority expect the base rate to be kept on hold at 0.5 percent for an 85th consecutive month, the monetary policy statement, and in particular any mention of the effect on the economy of a ‘Brexit’, could move the market,” Cheetham told AFP.

“The slight move lower we are seeing could be attributed to investors acting cautiously and deciding to take some money off the table following the recent rally.”

Asian stocks rallied for a second straight session Thursday, tracking gains in New York where traders cheered surprisingly upbeat earnings from Wall Street titan JPMorgan Chase.

The renewed confidence saw investors shift out of the safe investment yen, which in turn helped Japan’s Nikkei soar more than three percent.

A shock decision by Singapore to loosen monetary policy sent the island-state’s dollar tumbling, dragging other emerging market currencies.

After Wednesday’s rally, regional investors returned to trading floors to news that JP Morgan had posted forecast-beating first-quarter earnings.

The banking giant also said the US economy, the world’s biggest, was on a solid footing and dismissed the prospect it would go into recession this year. The news provided strong support for the financial sector, with all three main New York indexes ending more than one percent higher.

“The fact that investor appetite for the heavily weighted banking sector looks to be returning could help see an even stronger day,” Angus Nicholson, a IG markets analyst in Melbourne, told clients.

Hong Kong was up 0.9 percent while Shanghai ended 0.5 percent higher. Sydney climbed 1.3 percent and Seoul shot up 1.8 percent.

Tokyo led the gains, with the Nikkei flying 3.2 percent. Japanese exporters were the big beneficiaries of another drop in the yen against the dollar.

– Key figures around 1015 GMT –

London – FTSE 100: DOWN 0.1 percent at 6,358 points

Frankfurt – DAX 30: UP 0.2 percent at 10,047

Paris – CAC 40: DOWN 0.1 percent at 4,486

EURO STOXX 50: FLAT at 3,040

Tokyo – Nikkei 225: UP 3.2 percent at 16,011.05 (close)

Shanghai – Composite: UP 0.5 percent at 3,082.36 (close)

Hong Kong – Hang Seng: UP 0.9 percent at 21,337.81 (close)

New York – Dow: UP 1.1 percent at 17,908.28 (close)

Euro/dollar: DOWN at $1.1264 from $1.1276 on Wednesday

Dollar/yen: DOWN at 109.14 yen from 109.33 yen

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