Upbeat earnings lift European stocks ahead of Fed
Reuters
Published Jul 29, 2015 04:56AM ET
Upbeat earnings lift European stocks ahead of Fed
By Emelia Sithole-Matarise
LONDON (Reuters) - European equities advanced on Wednesday, spurred by strong corporate earnings and gains in U.S. and Asian markets on hopes that Beijing could stem the rout in its markets without damage to the world's second biggest economy.
The euro, the dollar and the yen held steady as caution reigned before a policy decision from the U.S. Federal Reserve.
Pledges from Chinese regulators to buy shares to stabilize stocks if needed and hints of more policy easing from the central bank helped soothe sentiment, prompting a bounce in some commodities such as copper.
Against the calmer backdrop in financial markets, the pan-European FTSEurofirst 300 index (FTEU3) rose 0.8 percent after carmaker Peugeot (PA:PEUP) reported first-half net income for the first time in four years. Oil major Total (PA:TOTF) posted higher-than-expected second-quarter profits.
"The results from European companies have been reasonably reassuring so far, although China is impacting a few of them," Mirabaud Securities' senior equity sales trader John Plassard said.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) rose 0.4 percent.
Investors are also focused on the outcome of the Fed's two-day policy meeting with markets divided on whether it will take a hawkish or dovish stance, while some suspect it might chose to do neither. No move on rates is expected this week.
In recent congressional testimony, Fed Chair Janet Yellen neither ruled out a September interest rate hike nor guided the market toward thinking it was a done deal.
European and U.S. government bond yields were broadly steady. [GVD/EUR]
In currency markets, investors seemed to decide it was safer not to be actively short of the U.S. dollar ahead of the policy statement due at 1800 GMT. The dollar was up 0.2 percent against the euro at $1.1040 and up 0.1 percent at 123.71 yen. The moves were well within recent ranges in low trading volumes.
"In the near term there is caution caused by investor wariness in chasing any trends given we have the FOMC meeting ending today," Societe Generale (PARIS:SOGN) FX strategist Alvin Tan said.
"If the Fed continues to be relatively neutral in its tone by not dropping any hints of an imminent rate hike probably markets will continue to stabilize," he said.
In energy markets, oil prices fell as concerns over global oversupply outweighed the impact of a what is likely to be a larger-than-expected draw on U.S. crude stocks. [O/R]
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Brent futures LCOc1 were down 66 cents at $52.66 a barrel and near their lowest since February. U.S. crude for September delivery CLc1 slipped 42 cents to $47.56 a barrel.
Written By: Reuters
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