* Europe's FTSEurofirst 300 index up 0.4 pct, near 2012 high
* Markets await ECB president's comments on policy outlook
* Euro slides back from 7-week high against dollar
* Oil, gold steady, cautious ahead of U.S. jobs report
By Richard Hubbard
LONDON, Dec 6 European stocks held near their
highs for the year on Thursday while the euro was flat as
markets awaited new economic forecasts from the European Central
Bank for clues on prospects for future interest rate cuts.
The ECB, as expected, kept its benchmark rate at a record
low of 0.75 percent after its policy meeting but President Mario
Draghi is expected to reveal lower economic growth projections
at the subsequent news conference.
The euro held steady against the dollar at $1.3065
after the rates decision.
"The market is wondering if the ECB will hint at a rate cut
to come, and if it does, this could point to a weaker euro. But
the euro is still in rally mode until it gets back below $1.30,"
said John Hardy, currency strategist at Saxo Bank.
European stocks were also unaffected by the decision with
the FTSEurofirst 300 index of top companies up 0.4
percent at 1,128.65 points having earlier touched its highest
level for the year to date of 1,132.79 points.
London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX were as much as 0.9 percent higher.
U.S. stock index futures indicated Wall Street would open
little changed on Thursday in what could be another choppy
session as the progress of budget talks in Washington continues
to determine the market's fate.
The MSCI world equity index, which has
gained over 11 percent so far this year, added 0.25 percent to
333.85 points, helped by big gains in Asian shares outside Japan
, which have reached 16-month highs.
Signs of gathering momentum in China's giant economy, the
modest recovery in the United States and Europe's recession-hit
economies may have stabilised have encouraged demand in the
world's main equity markets ahead of the new year.
"The momentum is positive for equity markets, which remain
cheap compared with credit and government bonds," said Frederic
Jamet, head of management at State Street Global Advisors
However, the lack of any progress in Washington at talks
among politicians to avoid the "fiscal cliff" of spending cuts
and tax rises starting in January is limiting the gains.
Financial markets were reassured on Wednesday when
President Barack Obama said a deal was possible in "about a
week" if Republicans compromise on taxes. No side has yet made
The lack of a breakthrough supported safe-haven government
bonds, keeping German Bund futures within tight ranges. Ten-year
U.S. Treasury yields were hovering near a two-month low at 1.58
EUROPE IN FOCUS
The Bank of England also left its policy unchanged on
Thursday, a month after completing its latest quantitative
easing programme, as inflation outweighed worries about a
The decision came despite finance minister George Osborne
saying on Wednesday that Britain's economy would grow much more
slowly than expected over the next three years and that a debt
reduction goal would not be met.
French long-term bond yields fell at its first debt sale
since Moody's downgraded the euro zone's No. 2 economy last
month, as investors continued to seek the liquidity and safety
of the French market.
Italian and Spanish government bond yields, however, rose as
investors' recent enthusiasm for peripheral debt fades following
a disappointing auction by Madrid on Wednesday.
In crude oil and other commodity markets gains were being
checked by niggling worries about the growth outlook for the
global economy before Friday's release of the U.S. non-farm
payrolls report for November.
Three-month copper on the London Metal Exchange was
down 0.1 percent at $8,065 a tonne, reversing gains from the
previous session when it hit its highest since Oct. 19.
Data from Asia on Thursday added to the uncertainty about
the prospect for future demand. South Korea's central bank said
that growth this year in Asia's fourth-largest economy would
probably fall below its 2.4-percent target.
U.S. crude futures fell 38 cents to $87.50 a barrel,
while Brent was down 50 cents at $108.30.
"Overall, the markets are weak with the global economic
concerns and will be trapped in a range until the U.S. 'fiscal
cliff' issue is behind us," said Tony Nunan, an oil risk manager
with Mitsubishi Corp in Tokyo.
Spot gold was around $1,690 an ounce, near the
one-month low of $1,684.40 that it hit on Wednesday after a
weaker price forecast by Goldman Sachs.