Bonds News

GLOBAL MARKETS-ECB prepares some sub-zero relief for wilting Europe

* Euro at two-month lows as weak German data adds to ECB cut talk

* Entire Swiss bond curve negative yields as 50-year succumbs

* Nikkei, Australian shares hit multi-month highs

* China shares rise on trade talk hopes

* ECB rate decision at 1145 GMT, news conference at 1230 GMT

* World FX rates in 2019

* Asian stock markets :

LONDON, July 25 (Reuters) - The euro and bond yields wilted in a sweltering Europe on Thursday as the European Central Bank signalled it was ready for even deeper sub-zero interest rates and to restart its mass bond buying programme.

The bank didn’t take any steps on the day but its easing intentions were clear. It left the euro at a two-month trough , sent German Bund yields back to record lows and nudged Europe’s main stock markets higher.

Traders were waiting for Mario Draghi’s 1230 GMT news conference but German data had earlier added to the call for ECB action after it showed business morale in the bloc’s largest economy had hit its lowest since April 2013.

The ripple effect saw bond yields bow across Europe. As well as the Bund yield slide, neighbouring Switzerland’s 50-year government bond yield even went negative, meaning that none of its debt now offers buyers any interest.

The ECB “is clearly preparing for a package of policy easing in September,” said analysts at TD Securities, “We look for a dovish press conference now.”

Wall Street was also expected to open higher amid another blizzard of earnings. The S&P 500 and Nasdaq had both hit record highs on Wednesday after reassuring comments from Texas Instruments about global chip demand blunted the impact of weak earnings from Boeing and Caterpillar.

Facebook share were also up around 1% in pre-market trading after it announced forecast-beating revenues after Wednesday’s closing bell.

The social media company’s stock has surged over 56% so far this year, despite warnings on future revenue growth from new data privacy rules and forthcoming privacy-focused product changes.

Asia then managed to overcome some early wobbles to finish higher and with some striking milestones.

Japan’s Nikkei touched a near three-month high, although Australia stole the glory as it ended near a 12-year peak after its central bank chief stressed interest rates could continue to fall.

Chinese blue-chips also added 0.5% in Shanghai. Investors there looked with hope to a meeting between top U.S. and Chinese negotiators next week, even if there are few signs that it will produce real progress in the two countries’ trade war.

“Lower rates are generally, in a traditional, mechanical way, good news for equity prices,” said Jim McCafferty, head of equity research, Asia ex-Japan, at Nomura.


For all the ECB focus, the day’s fireworks had already gone off in Turkey.

The country slashed its main interest rate to 19.75% from 24% in the first rate meeting since President Tayyip Erdogan sacked the former central bank chief for not cutting rates fast or furiously enough.

New governor Murat Uysal didn’t waste any time and the lira rose 0.3% in response.

“The CBRT (Turkish central bank) had room for manoueuvre given real rates are at 8%, and decided to front-load some of its expected easing,” said Standard Chartered economist Carla Slim.

“It likely deemed the global market and geopolitical backdrop benign enough to give more weight to domestic issues. The risk is that cutting too much too soon could unnerve markets.”

Back among the major currencies, the dollar was down against the yen at 108.07 and the dollar index, which tracks it against six major currencies, barely budged at 97.757.

Sterling was broadly flat at $1.2475, after falling for several sessions as market participants feared the looming possibility of a no-deal Brexit under Britain’s new prime minister, Boris Johnson.

“If talks between the UK and EU break down, the GBP could see further losses,” said Steven Dooley, currency strategist at Western Union Business Solutions.

In commodities, U.S. crude added 20 cents to $56.08 per barrel while Brent crude climbed 15 cents to $63.33.

The advance came amid Middle East tensions and a big fall in weekly U.S. crude stockpiles, although the gains were curbed by a frail demand outlook and increasing signs of slowing global economic growth.

Spot gold slipped 0.2% to $1,423.09 an ounce, short of last week’s peak of $1,452.60.

Additional reporting by Saikat Chatterjee in London and Swati Pandey in Sydney; editing by Jon Boyle, Larry King