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 The gains follow a rise in Asia <.MIAPJ0000PUS> and another record
day on the Wall Street <.DJI> <.SPX>. U.S. stocks futures <ESc1>
pointed to a flat start.
Euro zone government bond yields were slightly higher but remained
near record lows as investors anticipated the ECB's purchases. The
central bank will finalize the details of its scheme at its meeting
on Thursday and may start buying immediately afterwards.
German retail sales rose 2.9 percent month-on-month and 5.3 percent
year-on-year in January, more than economists had forecast, helping
lift the DAX stock index <.GDAXI> 0.2 percent.
"Euro zone economic surprises have veered from extremely negative to
extremely positive in very short order," said Eric Lascelles, chief
economist at RBC Global Asset Management.
"Euro zone prospects may be turning up."
Merger speculation in the Portuguese banking sector also supported
the European market. Shares in Banco BPI <BBPI.LS> and Banco
Comercial Portugues <BCP.LS> were up 6-8 percent.
The pan-European FTSEurofirst 300 index <.FTEU3> was up 0.1 percent
at 1,562.36 points, just off Monday's seven-year high.
"German retail sales got off to a very strong start in the new year
on the back of (lower) energy prices and no doubt due to the (hike
in) minimum wage," said Norbert Wuthe, senior analyst at Bayerische
Landesbank.
The dollar pulled back from an 11-year high against a basket of
major currencies, coming under pressure against the yen after Etsuro
Honda, an economic adviser to Prime Minister Shinzo Abe, told the
Wall Street Journal that dollar/yen may be at the "upper limit of
comfort zone".
The dollar index <.DXY> was last 95.493, having risen as high as
95.516 in Asian trading.
"Honda's comments reflect the latest view of the government and come
ahead of a proposed visit by Abe to the United States in April,"
said Yujiro Goto, currency strategist at Nomura.
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"They might not want the yen to weaken too much ahead of the visit.
So in the short term the yen's weakness could slow, but over the
medium term it will still weaken."
Some countries, especially in the G7, had complained about sharp yen
weakness in early 2013, just as Abe came to power and the Bank of
Japan was about to embark on a huge quantitative easing program to
get inflation back to 2 percent.
The Australian dollar rallied against its U.S. counterpart after the
RBA opted to leave its policy rate unchanged at record low of 2.25
percent, surprising some who had looked for another cut after a
similar move in February.
The Aussie was 0.5 percent higher at $0.7803, bouncing from $0.7751
before the decision.
The euro weakened slightly to $1.1164.
Brent crude oil prices <LCOc1> were steady, while spot gold
recovered after a brief fall below $1,200 an ounce.
(Additional reporting by Francesco Canepa and Anirban Nag; Editing
by Catherine Evans)
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