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 Miner Alcoa Inc AA.N reported results after Wall Street closed that
beat analysts' expectations, but that was not enough to help
European equities recover after posting their biggest fall in three
months on Tuesday.
Major currencies and bond markets were steady ahead of two
potentially major monetary policy events later in the day. The U.S.
Federal Reserve will release minutes of its latest policy meeting
and European Central Bank President Mario Draghi is scheduled to
speak.
"You tend to get an up move after a good sell-off, but I'd still be
selling any strength on the stock markets for now," said Darren
Courtney-Cook, head of trading at Central Markets Investment
Management.
The FTSEuroFirst 300 index of leading European shares was down 0.1
percent at 1,362 points .FTEU3 in early trade, while Germany's DAX
and France's CAC 40 were both flat at 9,779 points .GDAXI and 4,345
points .FCHI, respectively.
Britain's FTSE 100 was down a quarter of one percent at 6,721 points
.FTSE, dragged lower by the insurance sector. Admiral Group fell 6
percent .ADML.L after issuing a trading statement update, and Aviva
was down 3 percent AV.L.
Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 0.7 percent, touching its lowest point in a week
and pulling away from last week's three-year highs. Japan's Nikkei
stock average .N225 ended down 0.1 percent.
Overnight, China's consumer price index rose 2.3 percent in June
from a year earlier, shy of the consensus forecast of 2.4 percent,
and a sign economic activity may be cooling.
"The weaker CPI reading ... provides further room for policy easing
in the future on the one hand, and also signals the weak demand from
the domestic economy on the other hand," said Wang Jun, an economist
at the China Centre for International Economic Exchanges in Beijing.
DRAGHI RETURNS TO LONDON
In currency markets, China guided its yuan towards a three-month
high against the dollar in what traders said was possibly a
political move as China and the United States started their annual
Strategic and Economic Dialogue.
The euro and sterling were unchanged at $1.3615 EUR= and $1.7121 GBP=,
respectively, while the dollar inched up against the yen to 101.60
yen JPY=.
The dollar has this week fallen back below a key long-term technical
level against the yen. That's the 200-day moving average, which on
Wednesday was 101.83 yen, suggesting it may not strengthen much - if
at all - in the coming days and weeks.
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Major bond markets were steady ahead of the Fed minutes and Draghi's
speech in London, where he delivered his famous speech almost
exactly two years ago pledging to do "whatever it takes" to save the
euro.
The benchmark 10-year Treasury yield US10YT=RR stood at 2.575
percent in early European trade, up one basis point from the U.S.
close of 2.565 percent.
Upbeat June U.S. employment data last week has prompted some Wall
Street economists to predict the Fed will raise interest rates
earlier than previously thought. But yields have fallen since then,
with investors cautious about the strength of the recovery.
Downbeat German economic data on Tuesday kept the benchmark Bund
yield anchored, and in early trade on Wednesday it touched its
lowest in a year at 1.218 percent EU10YT=RR.
Draghi takes the stage later in the day, and investors will be
looking for signs the ECB could take further easing steps to support
the euro zone economy.
In commodities trading, Brent oil LCOc1 fell 0.4 percent to $108.53
per barrel. It has lost 3.5 percent so far this month.
Gold XAU= rose 0.4 percent on the day to $1,324.00 an ounce as
markets waited for the Fed minutes.
(Reporting by Jamie McGeever, additional reporting by Sudip Kar-Gupta
in London and Aileen Wang in Beijing, editing by John Stonestreet)
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