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 Germany's DAX snapped a four-day winning streak and the broader
FTSEuroFirst 300 index of leading European shares erased much of
Tuesday's rise, which was the biggest in three weeks.
U.S. futures pointed to a fall of around a third of one percent on
Wall Street. Shares in Walt Disney Co. were down nearly 5 percent in
pre-market trade after reporting a rare earnings miss late on
Tuesday.
"I'm still in the bearish camp, and any rallies on the market are
for selling," said Terry Torrison, managing director at Monaco-based
McLaren Securities. "Some company results have beaten expectations,
but you have to remember by just how much some of these expectations
had already been lowered."
Financial services were among the biggest losers in Europe. Their 2
percent fall was led by a 10 percent plunge in Austria's Raiffeisen
Bank International after it said it would look into a possible
merger with RZB.
Shares in outdoor advertising firm JC Decaux <JCDX.PA> slumped
nearly 10 percent after it issued a weak second-quarter outlook.
Several investment banks cut their ratings and price targets on the
stock.
The FTSEuroFirst 300, German DAX and fFench CAC 40 were all down
around 1 percent. Britain's FTSE 100 slipped 0.1 percent lower.
MSCI's broadest index of Asia-Pacific shares outside Japan also fell
0.1 percent. It has risen only one day in the last three weeks and
on Tuesday it hit an eight-week low.
Japanese shares ended flat, with the Nikkei relinquishing
earlier gains as a rally in the yen gathered steam.
MSCI's broad gauge of global stocks fell, too. On Tuesday it had
climbed nearly 1.1 percent, its best session in about a month, in
large part driven by the S&P 500's best day in two months, a 1.3
percent rise.
MARATHON, NOT A SPRINT
In currency markets, the dollar weakened, led by losses against the
yen. The U.S. currency had risen to a two-week high after an
economic adviser to Prime Minister Shinzo Abe told Reuters on
Tuesday that Japan would intervene if the yen strengthened to 90 to
95 per dollar.
But dealers locked in profits on Wednesday, pushing the dollar down
0.7 percent to 108.50 yen. Last week the Japanese currency hit an
18-month high of 105.55 per dollar.
"The recent rise in dollar/yen might be seen as a victory for the
Bank of Japan but, perhaps unfortunately, this looks more like a
marathon than a sprint," said Steve Barrow, head of G10 strategy at
Standard Bank.
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The euro rose 0.2 percent on the day to $1.1390. Last week, it
traded at $1.16, its highest this year.
The dollar's index against a basket of six major currencies was down
a quarter of one percent at 94.070, easing back from Tuesday's
two-week high of 94.150.
Bonds remained well-supported, indicating investors were wary about
riskier assets in an environment of sluggish global growth.
An auction of three-year U.S. notes on Tuesday was received well.
Yields on 10-year debt were at 1.75 percent, not far away from a
2016 low of 1.53 percent.
German government bonds also reflected the cautious undertone.
Ten-year yields were down a basis point at 0.11 percent.
Longer-dated yields on peripheral Spanish and Italian bonds,
however, climbed to multi-month highs on Wednesday as Spain began
the sale of a 50-year bond and investors anticipated Italy might
soon do the same.
Spain's benchmark 30-year bond yields rose to a two-month high of
2.95 percent and Italy's rose as high as 2.78 percent. Spain
received orders of over 10 billion euros for its bond.
In commodities, oil prices see-sawed after Tuesday's rally of around
4 percent. Brent crude futures were last up 1 percent at
$46.00 per barrel and U.S. crude futures were up 0.3 percent at
$44.80 per barrel. Both had opened the European day around 1 percent
lower.
(Reporting by Jamie McGeever; Editing by Larry King)
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