GLOBAL MARKETS-Shares tick up ahead of Fed minutes, gold falls

Wed Nov 20, 2013 11:25am EST

* Euro falls after report of possible ECB deposit rate
change
    * Markets await Fed minutes for stimulus hints
    * Gold prices down, Brent rises modestly
    * China sets yuan mid-point at post-revaluation high


    By Ryan Vlastelica
    NEW YORK, Nov 20 (Reuters) - The euro fell on Wednesday
while stock markets around the world were little changed after a
report that the European Central Bank was considering a negative
deposit rate.
    Citing unnamed sources, Bloomberg reported that the ECB was
considering making banks pay to deposit cash with it overnight,
and that if it decides to take the deposit rate into negative
territory from the current level of zero, it would consider an
interest rate of -0.1 percent. 
    The euro fell to its lows of the day while the U.S.
dollar index rose 0.2 percent to its highs of the day. 
    Equity investors were looking ahead to upcoming comments
from the U.S. Federal Reserve, which was expected to confirm
that its stimulus would remain in place, while the euro slumped
after a report.
    The program, as well as similar programs from other major
central banks, has fueled equity gains in 2013, taking Wall
Street to repeated all-time highs and other regions to
multi-year highs. 
    Fed Chairman Ben Bernanke set the tone late on Tuesday for
what is expected to be a cautiously upbeat assessment from the
Fed minutes, saying the U.S. central bank would keep monetary
policy ultra-easy as long as needed. 
    "There's been talk that tapering is coming soon. Maybe this
takes some pressure off" the market, said Peter Jankovskis,
co-chief investment officer at OakBrook Investments in Lisle,
Illinois. 
    While the Fed's accommodative monetary policy is expected to
provide a floor under equities for as long as it continues,
questions about when it will start to be slowed have tempered
some buying enthusiasm. In addition, the size of the rally has
market participants seeking new catalysts in an environment
marked by signs of tepid economic growth. 
    The MSCI world share index fell 0.1 percent,
while European shares rose 0.1 percent. 
    The Dow Jones industrial average was up 12.10 points,
or 0.08 percent, at 15,979.13. The Standard & Poor's 500 Index
 was up 3.33 points, or 0.19 percent, at 1,791.20. The
Nasdaq Composite Index was up 11.86 points, or 0.30
percent, at 3,943.41. 
    U.S. equities were also boosted by data showing consumer
spending rose more than expected in October, while consumer
prices unexpectedly fell. 
    "Strength in the economy and subdued inflation pressures
mean the Fed doesn't have to rush to reduce its stimulus,"
Jankovskis said. 
    Among other asset classes, Brent crude rose 0.9
percent. Gold prices fell 0.9 percent on the day while
copper was up 0.3 percent.
    The benchmark 10-year U.S. Treasury note was up
1/32, the yield at 2.7068 percent. The dollar fell 0.2 percent
against the yen.
    
     
                    
    BOE STEADY, CHINA SEEN WIDENING YUAN BAND
    In Britain, now the best-performing of Europe's big
economies, the Bank of England also published minutes from its
latest meeting, saying the country is in a sustained recovery
and there are no major inflation risks. The BOE also stressed it
was in no rush to raise interest rates. 
    Sterling initially cut early gains, while UK
government bonds and shares pared losses. But the impact proved
to be short-lived and was soon reversed.
    In another closely watched move, the Chinese central bank
set the yuan's mid-point for Wednesday trading at 6.1305 per
dollar, its highest since the landmark revaluation in
2005. 
    Zhou Xiaochuan, head of the People's Bank of China, said in
a book about the reforms published on Tuesday that China will
gradually expand the yuan's foreign exchange trading band to
make the currency more flexible and market-driven.
    That does not necessarily mean China will move the trading
band overnight, but some analysts think the yuan could gain in
the near term on speculation of a wider trading band. For the
wider market, it should mean Beijing is less likely to buy U.S.
dollars to keep its currency in check. 
    The yuan was little changed in onshore trading, changing
hands at 6.0923 per dollar compared with 6.0927 at
the local close on Tuesday.
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