January 29, 2014 / 6:15 AM / 4 years ago

European Factors to Watch-Turkey rate hike seen lifting Europe shares

LONDON, Jan 29 (Reuters) - European stocks were seen opening higher on Wednesday, with traders saying a move overnight by Turkey to hike all of its key interest rates to defend the country’s crumbling lira currency was helping to buoy equity markets.

Financial spreadbetters expected Britain’s FTSE 100 to open 43-48 points higher, or up by as much as 0.7 percent, Germany’s DAX was seen opening 86-96 points higher, or up by around 1 percent, and France’s CAC 40 seen up by 36-39 points, or up by around 0.9 percent.

Alongside the move by the Turkish central bank, traders will be waiting for the outcome of a U.S. Federal Reserve meeting on Wednesday, with the U.S. central bank due to make a statement at 1900 GMT.

Turmoil in emerging markets and a month of disappointing job growth at home are unlikely to deter the Federal Reserve from trimming its bond-buying stimulus programme on Wednesday, as Ben Bernanke wraps up his last policy meeting at the helm of the U.S. central bank.

Overall signs of improvement in the U.S. economy suggest Fed officials will stay on track to cut monthly purchases of Treasuries and mortgage-backed securities by $5 billion each, bringing the total of their monthly asset purchases to $65 billion.

Turkey’s decision to hike its interest rates lifted Asian equity markets, and traders expected European equities to follow suit. Investors said the action taken by Turkey could help stem a recent major sell-off in emerging markets.

“Turkey’s attempt to quash its own currency troubles by hiking interest rates by 4.25 percentage points overnight seems to have steadied the recent fears of an emerging market rout. Asian markets and index futures have all reacted positively and the surge in positive sentiment is expected to still be intact when it hits European shores,” said Capital Spreads dealer Jonathan Sudaria. ------------------------------------------------------------------------------ > GLOBAL MARKETS-Asia enjoys relief rally as Turkey takes bold step

> US STOCKS-Wall St rebounds with Pfizer and the Fed; Apple sinks > Nikkei jumps nearly 2 pct after Turkey rate hike; Advantest dives > TREASURIES-Bond prices edge higher on weak US durable goods data > FOREX-Yen skids, Aussie rallies as Turkey delivers big rate hikes > PRECIOUS-Gold slips for third session, Fed policy meeting in focus > METALS-Copper edges up from 7-week low after Turkey rate hike > Brent holds above $107 ahead of U.S. Fed meet outcome

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