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GLOBAL MARKETS-Stocks waver, bond yields rise as ECB seen on hold
August 29, 2014 / 3:30 PM / 3 years ago

GLOBAL MARKETS-Stocks waver, bond yields rise as ECB seen on hold

* Euro off lows as inflation cools bets for ECB cut next
week
    * Wall Street mixed, even after mostly strong economic
reports
    * German Bunds near record lows, having risen a tad

 (Adds open of U.S. markets; changes byline, dateline; previous
LONDON)
    By Herbert Lash
    NEW YORK, Aug 29 (Reuters) - Global equity markets wavered
and German bond yields edged up from record lows on Friday after
euro zone inflation was seen as still not dire enough to drive
the European Central Bank to ease monetary policy next week, as
many investors have anticipated.
    Euro zone inflation dropped to a fresh five-year low, but it
was not seen as low enough to force the ECB to enact monetary
stimulus, putting a damper on European shares that nonetheless
were expected to finish August in positive territory.
 
    Stocks on Wall Street straddled either side of breakeven,
and MSCI's gauge of worldwide stock performance 
was slightly lower, down 0.03 percent.
    European bond yields fell sharply across the euro zone at
the start of the week after ECB President Mario Draghi
highlighted a significant drop in inflation expectations in a
speech at a meeting of central bankers in Jackson Hole, Wyoming.
    Draghi's comments raised expectations that the ECB would
soon deploy a large-scale purchase of assets known as
quantitative easing, or QE. That view helped weaken the euro and
boosted enthusiasm for stocks on both sides of the Atlantic.
    "What people realize is that for the ECB to engage in
public-sector QE ... the ECB has to see the whites of the eyes
of deflation," said Wouter Sturkenboom, investment strategist at
Russell Investments.
    German 10-year Bund yields, the benchmark for
euro zone borrowing costs, rose to 0.888 percent, having hit a
record low of 0.86 percent on Thursday.
    The benchmark 10-year U.S. Treasury fell
slightly, lifter its yield to 2.3360.  
    The Dow Jones industrial average fell 12.54 points,
or 0.07 percent, to 17,067.03. The S&P 500 rose 2.48
points, or 0.12 percent, to 1,999.22 and the Nasdaq Composite
 added 13.98 points, or 0.31 percent, to 4,571.68.
    The FTSEurofirst 300 index of top European shares
was up 0.05 percent at 1,369.99 points.
    The euro was last trading off a touch at $1.3161,
having risen to a day high of $1.3195 soon after a report on
euro zone inflation.

 (Additional reporting by Marc Jones in London; Editing by
Jonathan Oatis)

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