LONDON, July 15 European shares edged up and
euro zone bond yields dipped on Tuesday as investors balanced
accommodative signals on monetary policy against a pre-earnings
season warning from the software industry.
Global stock markets have been supported by dovish policy
measures from major central banks amid evidence of an economic
recovery, though worries over the pace of growth in Europe and
the health of the region's banks have weighed.
Markets also awaited German sentiment data for the region's
latest economic snapshot. British June inflation data showed a
greater-than-expected rise to hit its fastest rate since
January, picking up from a 4-1/2-year low.
The pan-European FTSEurofirst 300 share index rose
0.1 percent, with benchmark indexes in Frankfurt, Paris and
London trading flat to 0.3 percent higher, held back by a weaker
technology sector as Germany's Software AG fell 15
percent after cutting forecasts.
The MSCI All-Country World index also edged
up 0.1 percent, staying near record highs hit earlier this
German bund futures gained 0.1 percent and the U.S.
dollar index rose against a basket of currencies
including euro and yen after European Central Bank head Mario
Draghi said a stronger euro exchange rate was a risk to the
sustainability of the euro zone recovery.
Draghi said the ECB's Governing Council was unanimous on the
use of unconventional measures if inflation stayed too low.
"With the ECB signalling that it will continue to maintain
an easing bias, with the possibility of quantitative easing in
coming months, peripheral (bond) spreads probably have scope to
come further in," said Nick Stamenkovic, a bond strategist at
RIA Capital Markets.
Italian and Spanish 10-year yields were 3 basis points down
at 2.86 and 2.75 percent
respectively, while Portugal's slipped 1 basis point and
Greece's 3 basis points.
The Bank of Japan maintained its stimulus programme and
stuck to a forecast that inflation will approach its 2 percent
target next year, unfazed by recent data casting doubt on its
scenario of an investment-led economic recovery.
"The BoJ have essentially backed off the idea of
quantitative easing for now but are sending some cautious
signals on growth," Simon Derrick, head of currency strategy at
BNY Mellon, said. "Everything is stable and we are heading
slowly and jerkily back towards higher inflation."
U.S. and Asian stocks gained ground, with the Dow Jones
Industrial average hitting an intraday record on Monday,
helped by Citigroup's better-than-expected earnings and
more deals in the healthcare sector.
In Asia, Japan's Nikkei average rose 0.7 percent
while South Korea's Kospi gained 1.0 percent. MSCI's
broadest index of Asia-Pacific shares outside Japan
gained 0.2 percent.
The MSCI Emerging Market index MSCI's benchmark
emerging equity index inched up to a 16-month high.
Asian stock markets showed little reaction to
stronger-than-expected new loan and money supply data for China.
Chinese banks gave 1.08 trillion yuan ($173.90 billion) of new
loans in June, beating expectations of 915 billion.
The data, coming ahead of GDP and other numbers from China
due on Wednesday, underscored the perception that the Chinese
economy is stabilising after a shaky start to the year but still
needs more policy support to meet Beijing's growth target.
In the Middle East, Israel approved an Egyptian-proposed
deal that would halt the week-old Gaza shelling war on Tuesday
but the Palestinian territory's dominant Hamas Islamists said
they had not been consulted by Cairo.
U.S. crude oil slipped to $100.72 and Brent crude
futures edged down to $106.61.
(Reporting by Lionel Laurent, editing by John Stonestreet)