Europe higher, Asia slumps amid expectations Fed rate hike

AP News
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Posted: May 24, 2016 9:19 AM
Europe higher, Asia slumps amid expectations Fed rate hike

TOKYO (AP) — European stock markets rose on Tuesday, despite jitters in Asian trading, and the British pound rose as market expectations faded of an exit from the European Union.

KEEPING SCORE: France's CAC 40 added 1.7 percent to 4,397.39, and Germany's DAX gained 1.5 percent to 9,989.95. Britain's FTSE 100 rose 1 percent to 6,197.51. U.S. shares were set to head higher, with Dow and S&P futures both up 0.5 percent.

BREXIT WATCH: The pound rose 0.9 percent to a near-month high of $1.4609 as bookies slashed the odds on Britons voting to remain in the EU in a referendum on June 23. Concern over the potential economic damage of an EU exit, or Brexit, had pushed the pound to a seven-year low against the dollar in February. The market expectations also appeared to help stocks in Britain and Europe, for which a Brexit would represent significant uncertainty.

WAITING ON THE FED: Investors are also watching for clues on whether the U.S. Federal Reserve will raise interest rates next month. That would depend on its assessment of the resilience of the American economy, which impacts global growth. Speeches by several Fed members this week may give insights into what Fed policymakers might do at their meeting in June.

THE QUOTE: It seems "market participants are pining for more clarity after the Fed minutes, released last week, indicated that most members are in favor of a rate hike in June if economic conditions continue to improve," Bernard Aw of IG said in a client note. "The market wants more affirmation on this, although I would think that the writing is clear enough and what we need is not more rhetoric but hard data."

ASIA'S DAY: Japan's benchmark Nikkei 225 fell 0.9 percent to close at 16,498.76 as the yen continued to strengthen, hurting exporters. Australia's S&P/ASX 200 slipped 0.4 percent to 5,295.60. South Korea's Kospi edged down 0.9 percent to 1,937.68. Hong Kong's Hang Seng rose 0.1 percent to 19,830.43 while the Shanghai Composite index slid 0.8 percent to 2,821.67.

ENERGY: Benchmark U.S. crude rose 35 cents to $48.43 per barrel in electronic trading on the New York Mercantile Exchange. It fell 33 cents in the previous session. Brent crude, used to price international oils, rose 20 cents to $49.13 a barrel in London.

CURRENCIES: The dollar fell to 109.77 yen from 109.81 yen and the euro fell to $1.1159 from $1.1239.

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