* European shares edge higher after falls elsewhere
* Lower U.S. yields, BOJ comments push yen higher vs dollar
* Wall St set to open higher, eyes on Fed minutes, Yellen
(Updates with fresh prices,)
By Nigel Stephenson
LONDON, May 21 European stocks eked out meagre
gains on Wednesday, while sterling hit a 5 1/2-year high on
forecast-beating economic data and signs some Bank of England
policymakers were leaning towards an interest rate rise.
On a day when investors sought clues to the policy outlook
for the world's major central banks, the yen rose against the
dollar after the Bank of Japan dashed expectations of
further stimulus for the world's third-largest economy.
Later on Wednesday, Federal Reserve chair Janet Yellen
speaks in New York and the U.S. central bank will release the
minutes of its latest policy meeting. Most market participants
do not expect any solid clues on when interest rates may rise.
Europe's FTSEurofirst 300 share index was up 0.06
percent by 1110 GMT, steadying after the declines of recent days
although it remained not far from the 2014 peak hit last week.
Wall Street, whose broad sell-off on Tuesday initially
hit Asian and European markets, looked set to open slightly
higher, with S&P stock futures up 0.2 percent.
Rallies in European and U.S. shares have paused on signs the
economic recovery is stuttering. U.S. stocks are down more than
1 percent since the Dow and the S&P 500 hit record closing highs
on May 13.
Elections to the European Parliament in coming days are
being watched closely for any impact on reforms in several
However, an early rise in safe-haven German Bund futures was
reversed and a sale of new German 10-year bonds attracted fewer
bids than the debt on offer. Yields on
lower-rated euro zone government debt resumed their decline.
"The selling in peripherals has been overdone and with
today's very weak Bund auction investors are rethinking the
basic strategy. We live in a very low interest rate environment
and investors are still looking for a yield pickup," said
Christian Lenk, a fixed income strategist at DZ Bank.
Peripheral euro zone debt prices resumed their rally. Yields
on 10-year debt from Spain and Portugal
fell 3.3 and 6.1 basis points to 3.06 and 3.94
Earlier, Tokyo stocks closed 0.2 percent lower, hit by
a stronger yen after the BOJ kept monetary policy unchanged.
Governor Haruhiko Kuroda was optimistic Japan was on course
to meet the bank's inflation target.
Benchmark U.S. 10-year Treasury yields edged up
in Europe to 2.52 percent, still close to half-year lows.
Comments on Tuesday from a senior Fed official that the central
bank would be "relatively slow" in raising interest rates, and
the BOJ decision combined to push the dollar to a 3-1/2 month
low against the yen.
"Kuroda's comments are lowering expectations of further BOJ
stimulus and there is position squaring going on which is
driving dollar/yen lower," said Manuel Oliveri, FX strategist at
The euro was flat at $1.3677. The single currency hit
a 2-1/2 month low of $1.3648 last week on expectations the
European Central Bank will ease monetary policy in June.
However, sterling hit a 5-1/2 year high on a
trade-weighted basis and a 16-month peak against the euro after
a surge in retail sales last month and signs some Bank of
England policymakers are leaning towards a rise in interest
Brent crude oil futures edged up towards $110 a
barrel as U.S. crude inventories fell and on renewed violence in
OPEC producer Libya.
Gold dipped 0.1 percent to $1,292.56 an ounce,
failing to capitalise on stock weakness but with investors
cautious before the Fed minutes.
(Additional reporting by Lisa Twaronite in Tokyo, Alistar Smout
in Edinburgh, Emelia Sithole-Matarise and Anirban Nag in London;
Editing by John Stonestreet and Toby Chopra)