The dollar and Asian shares rose earlier after the Dow and the S&P
500 closed at record peaks on Monday, led by a rebound in pummeled
internet and biotech stocks on the back of strong corporate results
and an improving economic outlook <.N>.
Indian markets led Asian shares higher on expectations an election
victory for the nationalist opposition BJP party, viewed as
business-friendly, would spur a revival in the region's third
The run of positive corporate news continued in Europe, with
Germany's ThyssenKrupp <TKAG.DE> raising its full-year earnings
outlook on Tuesday, while aerospace group Airbus Group <AIR.PA>
posted a narrower-than-expected drop in core earnings and reaffirmed
its financial goals for the year.
The pan-European FTSEurofirst 300 <.FTEU3> index rose 0.2 percent to
1,367.60 points, its highest level since May 2008. Britain's FTSE
<.FTSE> was up 0.2 percent after briefly hitting its highest point
in roughly a year.
Sentiment was also supported by the European Central Bank's clearest
signal yet last week that it was poised to ease monetary policy
further next month to support the economic recovery. Investors were
also focused on Germany's ZEW monthly sentiment poll for its reading
of the euro zone's biggest economy.
"We are still slightly long (stocks) going into the ZEW, as
sentiment for stocks has markedly improved over the last couple of
days," said Markus Huber, senior sales trader at Peregrine and
"Expectations that the ECB will act soon in a decisive manner to
fight low inflation and the rise of the euro seem to outweigh
worries that potentially further and much harsher economic sanctions
could be imposed on Russia soon," he said.
He was referring to rising tensions between Western countries and
Russia over Ukraine. Global equity markets have so far brushed off a
weekend referendum in which pro-Moscow rebel organizers said nearly
90 percent had voted in favor of self-rule.
The rebound in global equities and a slew of euro zone debt sales
halted a recent rally in lower-rated euro zone government bonds.
German 10-year yields, the benchmark for euro zone borrowing, were
slightly up at 1.47 percent with traders keeping a close eye on a
speech later in the day by the head of the German central bank.
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Jens Weidmann is known for his hardline stance at the ECB and any
comment that differs from ECB President Mario Draghi's guidance last
week could increase uncertainty over June's meeting, hurting
Markets showed limited reaction to industrial production and
retail sales data from China, which were roughly in line with
The dollar edged up to brush a one-week high of 102.33 yen, helped
by higher U.S. Treasury yields on investor caution ahead of a slew
of data this week that could paint a brighter economic picture.
The euro stabilized near one-month lows against the dollar, as the
recent selloff abated before the ZEW survey, which might show some
improvement in morale in Europe's biggest economy. Still, any
rebound would probably be shortlived given the ECB outlook.
It climbed to $1.3770, away from its one-month low of $1.3745 hit on
Friday, having shed 1.2 percent since Draghi said the bank was ready
to take action next month.
"The main worry for the ECB is inflation, and if there is any
improvement in the ZEW, it will not be a game changer," said Yujiro
Goto, currency strategist at Nomura.
"We see the euro trading with a downward bias given the market is
expecting some kind of easing from the ECB next month. It is still
not clear whether it will do quantitative easing, but a rate cut is
(Additional reporting by Francesco Canepa and Anirban Nag; Editing
by John Stonestreet)
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