March 15, 2010 / 9:22 AM / 10 years ago

GLOBAL MARKETS-Central bank, Brussels meetings prompt caution

* Stocks weaker on central banks, China worries

* Greek debt in focus at Brussels meeting

* Dollar firmer, euro slips

By Jeremy Gaunt, European Investment Correspondent

LONDON, March 15 (Reuters) - Concerns about monetary tightening in China and caution ahead of U.S. and Japanese central bank policy meetings this week weighed on financial markets on Monday, weakening stocks.

The dollar strengthened a bit as a result.

MSCI's all-country world index .MIWD00000PUS was off 0.3 percent, with the pan-European FTSEurofirst 300 .FTEU3 down 0.4 percent and Japan's Nikkei closing up just 0.01 percent .N225.

“There’s a strong sense of wait and see in the market ahead of the meetings at the BOJ and the Federal Reserve, making trade rather range-bound,” said Yutaka Miura, a senior technical analyst at Mizuho Securities.

“At current levels, there is more profit-taking pressure and little active buying, except for short-covering.”

The U.S. Federal Reserve and Bank of Japan both meet in the coming week and will be keenly watched for their views on how attempts to ignite economic growth have fared.

Wednesday’s Fed meeting is expected to hold interest rates near zero and reiterate the need for an “extended period” of “exceptionally low” rates. [ID:nN10148647]

The Bank of Japan, meanwhile, is under pressure to loosen policy at its meeting on Tuesday and Wednesday, most likely in the form of increasing funds offered under its lending operation. [ID:nTOE61908Y]

China, in the meantime, is causing some investors concern because of both its rising inflation and its insistence that the yuan currency is not undervalued, a bone of contention with the United States.

On again, off again reports of European Union help for debt-burdened Greece were also putting some investors on edge.

Finance ministers from the 16 countries using the euro, the Eurogroup, were meeting in Brussels on Monday to discuss the Greek debtcrisis and the country’s progress in introducing austerity measures necessary to regain the confidence of markets [ID:nLDE62D08S]

BONDS STEADY, DOLLAR FIRMER

Partly as a result of the Brussels meeting, euro zone government bonds were relatively steady, with short-term debt prices rising slightly.

A senior EU source told Reuters on Saturday a mechanism for helping Greece would likely be agreed, although French and German authorities have expressed doubts a deal will be reached.

“We’ll obviously be watching that and any bailout should be supportive for peripherals at the margin,” said a bond trader in London.

The dollar reversed Friday’s losses to hold a slightly firmer tone while the euro slipped on concerns about Greece.

“The Brussels meeting is in focus today but we still think there is no quick-fix for the Greek problem. We still think the euro will go down overall,” said SEB currency strategist Johan Javeus.

The euro EUR= was trading down 0.2 percent on the day at $1.3740, retreating from a three-week high of $1.3796 hit on Friday. (Additional reporting by Ian Chua and Neal Armstrong, editing by Mike Peacock) (On Twitter: For economic tweets, follow www.twitter.com/macroscope. For investment tweets, follow www.twitter.com/reutersJeremyG)

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