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 Britain's FTSE 100 .FTSE opened up 0.3 percent as it played catch-up
after a holiday. The rest of Europe's main bourses .FTEU3, which saw
mostly steady starts, had made gains on Monday following European
election results.
Asian trading had been timid too, but another solid session for
Japan's Nikkei .N225 and shares in China, nudged MSCI's 45-country
all-world index up to 420 points leaving it just below its 2007
record high of 428.63 points.
Asset markets around the world continue to be supported by
record-low interest rates in most of the world's big economies.
ECB chief Mario Draghi on Monday bolstered the already-strong
expectation that the bank will cut euro zone interest rates again
next week and dip back into its unconventional policy cupboard.
Draghi said the ECB needed to be "particularly watchful" for any
negative price spiral in the euro zone, and that "more pre-emptive
action may be warranted," citing broad-based asset purchases as one
of the ultimate options.
He is set speak again later in an 'armchair' discussion in the final
day of the ECB forum underway in Portugal, along with a handful of
the bank's other policymakers.
The easing expectations kept plenty of downward pressure on euro
zone government borrowing costs in the region's buoyant bond
markets.
Interest rates on benchmark 10-year German Bunds hovered at 1.358
percent, while Italian bonds IT10YT=TWEB consolidated gains they had
made on Monday after its government scored a surprisingly easy win
in European Parliament elections over the anti-establishment 5-Star
Movement of former comic Beppe Grillo.
In the currency market, the dollar fell 0.2 percent against a basket
of currencies .DXY, extending weakness since the end of last week
after another retreat in U.S. bond yields.
The euro EUR= was at an unchanged $1.3645, with the softer dollar
keeping it above its recent three-month lows.
London-based analysts and traders said another big batch of U.S.
numbers were the best bet for a bigger market move on Tuesday after
a tight few days of trading, thinned out by U.S. and UK holiday
weekends.
"The dollar continues to struggle, and you can see that in the U.S.
rate curve and rate differentials which haven't moved in the
dollar’s favour," said Stephen Gallo, European head of FX strategy
with BMO in London.
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M&A
Another flurry of merger activity provided additional support for
European shares.
Intercontinental Hotels Group IHG.L jumped 5.2 percent, the top
performer on the pan-European FTSEurofirst 300 .FTEU3, buoyed by
British media reports of bid interest from the United States.
Investors kept a wary eye on Ukraine, which launched air strikes and
a paratrooper assault against pro-Russian rebels who seized an
airport on Monday.
The escalation in the ongoing crisis was tempered by the decisive
win for billionaire Petro Poroshenko in Ukraine's weekend
presidential election, which many hope will help bring some
stability to the situation.
In commodities trading, three-month copper on the London Metal
Exchange CMCU3 edged to its highest in nearly three months as
markets reopened after a holiday weekend.
U.S. crude futures CLc1 were up about 0.1 percent at $104.48 a
barrel. Spot gold XAU= was a touch lower at $1,288.65 an ounce.
(Additional reporting by Lisa Twaronite in Tokyo and Patrick Graham
in London Editing by Jeremy Gaunt.)
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