Forexpros – European stocks edged higher in choppy trade on Wednesday, as market sentiment found mild support after Greek political leaders announced the formation of a national unity government, while investors eyed a monetary policy statement by the Federal Reserve.
During European afternoon trade, the EURO STOXX 50 eased up 0.07%, France’s CAC 40 inched up 0.02%, while Germany’s DAX 30 rose 0.28%.
Stocks gained ground after Greek socialist leader Evangelos Venizelos announced the formation of a new government, adding that the make-up of the cabinet would be specified on Wednesday evening.
Investor confidence also remained supported ahead of the outcome of the Fed’s policy setting meeting, amid talk that the U.S. central bank may implement a third round of quantitative easing measures after a recent string of disappointing U.S. economic data.
Meanwhile, the yield on Spanish 10-year bonds eased back to 6.90% after climbing to euro-era highs earlier in the week, amid fears that Madrid will be forced to seek a full-fledged international bailout.
Financials stocks held gains, as shares in Spanish lender BBVA jumped 1.94%, while France’s BNP Paribas and Societe Generale rallied 1.42% and 1.72% respectively. Germany’s Deutsche Bank also saw shares advance 0.60%.
Meanwhile, French food-products group Danone remained sharply lower, tumbling 1.50%, after the company issued a profit warning on Tuesday, citing a drop in consumption in southern Europe, especially in Spain, and highlighting the accelerating fallout from Europe’s sovereign-debt crisis on large corporations.
Nokia shares also plunged 3.02%, extending earlier losses, as the cellphone company was still affected by last week’s downgrade to junk status by Moody’s ratings agency following the announcement of major budget cuts and global layoffs.
In London, commodity-heavy FTSE 100 climbed 0.62%, boosted by strong gains in mining stocks and after the Bank of England’s June meeting minutes showed that four policymakers out of nine voted in favor of another round of quantitative easing this month, including BoE governor Mervyn King.
Copper producers Xstrata and Kazakhmys were sharply higher, with shares surging 2.57% and 2.62% respectively, while mining giants Rio Tinto and Bhp Billiton climbed 2.32% and 1.15%.
Rio Tinto said earlier Wednesday that it planned to invest USD4.2 billion to develop its iron ore business in Australia and Guinea to meet strong Chinese demand.
Elsewhere, Ryanair rose 0.53% after saying it will make another attempt to buy rival Irish airline Aer Lingus, whose shares subsequently skyrocketed 15.79%.
Meanwhile, U.K. lenders tracked their European counterparts higher. Shares in Barclays rallied 2.26% and the Royal Bank of Scotland jumped 1.19%, while HSBC Holdings and Lloyds Banking climbed 1.07% and 0.94% respectively.
On the downside, Severn Trent saw shares plummet 6% after saying it intends to close a large stretch of Kingsholm Road in Gloucester for the second time in a year for flood prevention purposes. Many traders along Kingsholm Road say shutting the road again will put their livelihoods at risk.
In the U.S., equity markets pointed to a higher open. The Dow Jones Industrial Average futures pointed to a 0.16% rise, S&P 500 futures signaled a 0.23% increase, while the Nasdaq 100 futures indicated a 0.36% gain.
Also Wednesday, official data showed that German producer price inflation fell more-than-expected in May, ticking down 0.3% after a 0.2% rise the previous month. Analysts had expected producer price inflation to fall 0.1% in May.
Later in the day, the Federal Reserve was to announce its benchmark interest rate and publish its rate statement. The announcement was to be followed by a press conference with Fed Chairman Ben Bernanke to discuss the monetary policy decision.
Forexpros
