* Euro, yen mostly flat before ECB, BOJ decisions
* U.S. stocks seen opening firmer
* Nikkei soars 3 pct on monetary easing expectations
* Gold and industrial metals extend losses
By Richard Hubbard
LONDON, April 3 World shares, the euro and
German bonds barely moved on Wednesday as investors turned
cautious before this week's policy decisions by the Bank of
Japan and European Central Bank, followed by U.S. jobs data.
However, U.S. stock futures pointed to a firmer open on Wall
Street where both the Standard & Poor's 500 Index and the
Dow posted record closing highs on Tuesday, while rising
oil stockpiles sent crude prices lower.
On Thursday the ECB is forecast to leave interest rates
unchanged but expectations are high that Japan's central bank
will announce a forceful monetary easing to try to boost its
America's nonfarm payrolls report is likely to confirm
market views that the Federal Reserve will maintain its
extremely accommodative monetary policy, which has underpinned
investor sentiment all year.
"People ... are keeping their positions quite tight ahead of
central bank meetings and data later this week," Ioan Smith,
strategist at Knight Capital, said. "Even though the chances of
a surprise may be small, you don't want to be caught the wrong
way if there is one."
Before all these events European equity markets were taking
a breather, having posted big gains on Tuesday. The FTSE
Eurofirst 300 index of top European shares was
unchanged by midday, after surging 1.3 percent the previous day.
London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX were around 0.2 percent lower, giving
back a little of Tuesday's strong gains.
The MSCI world index, which covers over
9,000 shares in 45 countries, was flat at 360.2 points but is
hovering just below levels last seen in 2008.
Japan's Nikkei average was the stand out performer, soaring
3 percent for its biggest one-day rise in two months as
the expectations of easier policy from new BoJ Governor Haruhiko
Kuroda encouraged demand for export-oriented firms.
Some investors have warned about expecting further strong
gains in equity markets after the first quarter when many major
market indexes reached record or near-record highs, propelled by
the loose policies of global central banks.
"I'd be sceptical about continuing the stronger momentum
that we saw in the first quarter just because it very rarely
happens you get two such strong quarters in a row," said Tom
Elliott, global strategist at JP Morgan Asset Management. "I
think what we'll be seeing is probably investors over the next
three months looking for any slight excuse to take profits."
In the first quarter the benchmark U.S. S&P 500 index
rose 10 percent to a record high, while MSCI's broad world
equity index gained almost six percent.
In the debt market German Bund futures were little changed
despite a successful sale of 3.28 billion euros ($4.1 billion)
of new five-year bonds by the government, which attracted demand
from investors still fretting about Cyprus's messy bailout.
The sale came at a yield of 0.33 percent, the lowest at any
German five-year bond auction in 8 months. Markets then were in
full-blown crisis mode and anticipating that ECB bond buying
would be needed to prop up Spain and Italy.
"The average yield continues to decline which is a
reflection of the fact that investors are still prepared to put
money into German government bonds despite the low yield," said
Nick Stamenkovic, strategist at RIA Capital markets. "That
probably shows the ongoing niggling concerns about Cyprus and
political uncertainty in Italy."
The euro was flat at $1.2820, staying near a
four-month low of $1.2750 set last week as the currency remained
pressured by the concerns about Cyprus and weak euro zone
Against the yen, the dollar was close to unchanged at 93.43
yen, holding above its one-month low of 92.57 yen set on
"The story of the day is the market will be reluctant to do
anything because it's scared of being caught wrongfooted by what
comes out of Japan... and the ECB meeting tomorrow," said Daragh
Maher, FX strategist at HSBC.
In commodity markets, gold fell for a second day to touch a
four-week low of $1,563.06 an ounce, near to the 2013
nadir hit on Feb. 21 of $1,554.49, which was a six-month low.
"There is scope for gold to strengthen if economic data
isn't as strong as people are hoping, but at the moment, there's
a lack of justification to buy in the short term," Mitsui
Precious Metals analyst David Jollie said.
Copper hit its lowest level in eight months as concerns
about weak global demand encouraged speculators to step up
selling before a two-day holiday in China.
Three-month copper on the London Metal Exchange fell by 0.3
percent to $7,422.25 a tonne, having earlier touched
$7,404.50 a tonne, the lowest price since Aug. 20.
Downbeat U.S. manufacturing data released earlier this weak
has raised concerns about the pace of a recovery in the world's
LME aluminium fell to a seven-month low, lead
to a five-month low and nickel to its lowest in