| LONDON, March 19
LONDON, March 19 Stock markets slipped on
Wednesday, while major bond and currency markets held steady
ahead of a U.S. Federal Reserve policy decision later in the day
and as military tensions between Ukraine and Russia ratcheted
British financial markets largely followed that pattern
although sterling recovered some recent losses before a raft of
potentially market-moving news including the government's annual
budget, Bank of England minutes and unemployment data.
Europe's major stock markets were down as much as a third of
one percent in early trading, following Asian shares lower after
the the MSCI's broadest index of Asia-Pacific shares outside
Japan lost 0.2 percent.
Underlying worries over China's financial and property
sectors bubbled to the surface, pushing Chinese stocks lower
and the yuan to its weakest level in a year through 6.20
This is the first time the yuan has traded more than 1
percent beyond the midpoint set by the central bank after the
daily trading band was widened to 2 percent.
Global investors' main focus, however, remain the Fed and
"I expect gradually the focus to shift away from the
tensions between Russia and the West, unless we see actual
violence or some type of events other than sanctions that would
be seen as an escalation," Jan von Gerich, chief strategist at
Nordea in Helsinki, said.
Earlier, pro-Russian units took control of part of a naval
base in Ukraine, in the clearest sign so far that Russian
soldiers and volunteers who support them had begun to take
control of Ukrainian military facilities across the Black Sea
Ukraine's acting defence minister Ihor Tenyukh said shortly
after that his country's forces would not withdraw from Crimea
even though Russian President Vladimir Putin has signed a treaty
to make it part of Russia.
Later on Wednesday in Washington, the Fed is set to trim its
bond-buying stimulus by $10 billion a month for a third time in
a row and will probably rewrite its guidance on when it might
eventually raise interest rates.
The moves would represent both continuity at the U.S.
central bank as Janet Yellen chairs her first policy-setting
meeting and a nod to indications that recent economic weakness
is not solely down to harsh winter weather.
By 0900 GMT Britain's FTSE 100 was down 0.25 percent
at 6,589 points, Germany's DAX was up 0.1 percent at
9,250 points and France's CAC 40 was down 0.2 percent at
The FTSE Eurofirst index of the leading 300 European stocks
was flat around 1,305 points.
In currencies, the euro was down slightly at $1.3920,
retreating further from last week's 2-1/2-year high of $1.3967
and was down further against sterling at 83.71 pence.
"Our analysis suggests that sterling is oversold against the
euro," Valentin Marinov, G10 currency strategist at Citi in
London, said. "Sterling maybe in for a rebound ahead of the UK
labour market data and BoE minutes and the March budget today."
British finance minister George Osborne will announce a
pre-election budget on Wednesday that is likely to offer some
tax relief to voters but will stick closely to his tough
decade-long plan to fix the public finances.
The British jobs market is expected to show further signs of
improvement in February, and investors will scrutinise the
latest Bank of England minutes for clues on when rates might be
The dollar was up about 0.2 percent on the day at 101.65 yen
. The yen showed little reaction to Japan's
larger-than-expected trade deficit.
In metals, spot gold was down 0.7 percent at $1,346
an ounce, slipping further back from a six-month high of
$1,391.76 hit on Monday.
(Editing by Louise Ireland)