By Natsuko Waki
LONDON Feb 6 World stocks edged up from this
week's four-month lows in cautious trade ahead of a euro zone
monetary policy decision later on Thursday, supported by
relative calm in vulnerable emerging markets.
The euro was slightly weaker as some investors bet that the
European Central Bank could surprise markets with another
interest rate cut to ward off the threat of deflation after last
month's unexpectedly soft inflation reading.
The broad consensus is that there will be no change in the
bank's record low benchmark rate of 0.25 percent.
"Investors have started to position for either a dovish ECB
or ... for some sort of surprise (easing)," said Luca Cazzulani,
UniCredit rate strategist in Milan.
The MSCI world equity index rose 0.4
percent, while European stocks followed Asia higher by
gaining more than 1 percent. U.S. stock futures were
pointing to a firmer start on Wall Street later.
Relative calm in the capital-hungry emerging markets of
Turkey, South Africa and India also lifted developing stocks,
after a rout that drove safe-haven bids to U.S. Treasuries and
Emerging stocks rebounded 0.7 percent from this
week's five-month lows while the Turkish lira and South
African rand held above recent lows.
The banking sector is in the spotlight after Credit Suisse
missed expectations with a marginal uptick in
fourth-quarter net profit, and its shares were down more than 2
The euro was down slightly on the day at $1.3522 and
137.14 yen. The dollar rose 0.1 percent against a
basket of major currencies. German bond futures
were broadly steady.
The ECB is due to announce its decision at 1245 GMT. Some
investors also speculate it could suspend its sterilisation
programme - operations to soak up money brought into circulation
by the ECB's crisis-era purchases of euro zone government debt.
At a minimum, investors expect ECB chief Mario Draghi to
drop hints of his readiness to ease, which could help counter
worries about dwindling stimulus from the Federal Reserve.
"Expectations for more ECB action have definitely been an
important driving force for tighter intra-euro (yield) spreads,"
said Jussi Hiljanen, chief fixed income strategist at SEB in
Investors are looking for Friday's highly anticipated U.S.
jobs report to show solid growth after encouraging private
sector jobs numbers on Wednesday.
Economists surveyed by Reuters expect Friday's data will
show that employers added 185,000 jobs in January.
U.S. crude oil rose 1 percent to $98.421 a barrel.