European
shares dip from seven-year highs, China rate cut lifts Asia
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[March 02, 2015] By
Nigel Stephenson
LONDON (Reuters) - European shares slipped
from seven-year highs on Monday, weighed down by merger activity in the
telecoms sector, while Asian stocks edged up after China cut interest
rates at the weekend.
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The dollar hit an 11-year high against a basket of currencies on
growing prospects of a rise in U.S. interest rates from the U.S.
Federal Reserve, before giving up the gains as economic data lifted
the euro.
U.S. stocks looked to be headed for a steady open, according to
index futures.
The pan-European FTSEurofirst 300 stocks index edged up at the open
but lost steam and was last down 0.4 percent.
French media group Vivendi said on Friday it had agreed to sell its
remaining stake in the telecoms company Numericable-SFR to Altice,
whose shares were up 6.5 percent.
But falls of 5 percent in Vivendi and 7 percent in Greek banks
pressured the market and outweighed any beneficial impact of broadly
upbeat euro zone data.
German manufacturing activity expanded further in February as new
orders rose, according to Markit's final purchasing managers' index
(PMI) for the month. Italy's Markit/ADACI PMI showed the first
expansion in activity for five months, but French activity slowed
further in February.
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However, the numbers buoyed up the euro, which reversed early losses
to trade up 0.3 percent at $1.1288.
"This could well be coming from the data this morning, but any
rebounds at this point will be quite limited," said Ian Stannard,
head of European FX strategy with Morgan Stanley in London.
Against a basket of currencies, the dollar hit a peak not seen since
September 2003 before retreating. It was last down 0.2 percent on
the day. The dollar was up 0.2 percent at 119.72 yen.
China, which posted its slowest growth in decades in 2014, on
Saturday cut its benchmark lending and deposit rates.
A survey on Monday showed China's HSBC/Markit PMI had climbed to
50.7 in February - its strongest since July - from 49.7 in January.
An official survey released on Sunday showed the factory sector had
contracted for a second straight month in February.
The rate cut helped push Australian shares 0.5 percent higher as
shares in resources companies, which have prospered on the back of
Chinese demand, rose. The Shanghai Composite Index closed up 0.8
percent
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The impact in the rest of Asia was muted. MSCI's broadest index of
Asia-Pacific shares outside Japan rose 0.2 percent. Tokyo's Nikkei
closed up 0.2 percent as the yen lost ground against the dollar.
In euro zone government bond markets, Spanish, Italian and
Portuguese yields fell to record lows, as investors looked forward
to the start of the European Central Bank's quantitative easing
program later this month. ECB policymakers meet in Cyprus on
Wednesday and Thursday.
ROUBLE WEAKER
Russia's rouble weakened to 62.2 to the dollar, as the oil price
fell and after the murder of Boris Nemtsov, and prominent opposition
leader and critic of the Kremlin.
Brent crude fell nearly 2 percent to $61.40 a barrel, due to dollar
strength and a rise in Libyan oil output.
Expectations of demand from China lifted gold to a two-week high.
Spot gold later eased to $1,216.40 an ounce.
(Additional reporting by Atul Prakash and Patrick Graham in London,
Shinichi Saoshiro in Tokyo, Lidia Kelly and Vladimir Abramov in
Moscow; Editing by Kevin Liffey)
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