European stocks mostly dip before US, Japan bank meetings


LONDON (AFP) – European indices were mostly lower Tuesday as investors eyed looming central bank meetings in the US and Japan, but US stocks rose on the back of largely solid earnings from big hitters.

Having piled up healthy gains last week, traders took a step back before the two-day US Federal Reserve meeting, which starts Tuesday and may offer some signs of action by the in the future.

After the turmoil across world markets at the start of the year, the Fed has lowered expectations of rate rises this year — saying it would closely watch overseas developments before making a move.

Traders have predicted the next rise will be towards the end of the year but every utterance from the bank will be pored over for clues about its thinking.

“Regardless of the Fed outlook… markets price in less than 50 percent probability for a rate hike to happen this year,” noted Brenda Kelly, head analyst at trading firm London Capital Group.

Ahead of the meeting, London s benchmark FTSE 100 stood alone from its European counterparts, rising 0.4 percent in mid afternoon trading, while Frankfurt and Paris both slipped.

The euro rose against the dollar.

Wall Street opened higher after a raft of mostly solid earnings reports from large companies, including Procter & Gamble and DuPont.

“The major indexes are on track for a modestly positive open, but overall mood remains tentative given the Fed meeting,” Sheraz Mian, of Zacks Investment Research, in a note.

“The only thing that the Fed could potentially do tomorrow is to indicate whether they plan on making a move in the June meeting or not.

“They are not going to come out and tell us what they plan on doing, but the language that they use to describe the economic picture and downside risks to the outlook will get interpreted that way,” he added.

In Asia, Japan s Nikkei stocks index ended 0.5 percent lower, with the yen holding Monday s gains against the dollar despite speculation the country s central bank will ramp up its stimulus when its two-day policy meeting ends Thursday.

The BoJ has been tipped to further ease monetary policy after this month s double earthquake in southern Japan that caused factory closures at a time when the country s economy is stuttering.

“Despite speculation that the BoJ will act aggressively in a bid to stoke inflation, Japanese stocks fell for a third day” on Tuesday, said Kelly.

On oil markets, prices rebounded slightly on Tuesday from recent sharp losses that were sparked by a report that Saudi Arabia was close to completing an oilfield expansion.

Analysts said the gains, partly prompted by a slightly weaker dollar, would likely be short-lived due to lingering worries about a global supply glut.

Traders are also nervously awaiting the release of weekly US crude stockpiles data on Wednesday.



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