Markets digest Draghi's take on European economy

AP News
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Posted: Jan 09, 2014 9:26 AM

LONDON (AP) — Markets in Europe were steady on Thursday as investors digested the latest remarks from the European Central Bank's top official.

Though the ECB kept its interest rates unchanged, President Mario Draghi said in his ensuing press conference that further easing measures are possible in the months ahead as inflation remains low and growth weak.

Draghi said the bank is ready to "take further decisive action" and use "all available tools" to spur the weak recovery. However, he said it was "pointless to speculate" what specific measures the bank might take. He would say only that the bank could use any tool permitted under the European Union treaty that created the bank and the shared euro currency.

"The pressure on the central bank to take more action to support the eurozone's fragile recovery is likely to continue to build," said Jonathan Loynes, chief European economist at Capital Economics.

In Europe, Germany's DAX rose 0.2 percent to 9,513 while the CAC-40 in France fell the same rate to 4,254. The FTSE 100 index of leading British shares was flat at 6,721 after the Bank of England also kept policy on hold.

The euro took a bit of a hit following Draghi's remarks as traders priced in the possibility of more easing measures by the ECB in the future. It was trading 0.2 percent lower at $1.3556, having been above $1.36 before.

Wall Street was poised to open higher, with both Dow futures and the broader S&P 500 futures up 0.2 percent.

On Wednesday, most stock markets struggled amid concerns that the Federal Reserve will reduce its monetary stimulus more aggressively than anticipated because of the strength of the U.S. economy.

At its last policy meeting in December, the Fed took its first step to exit its current stimulus by deciding to trim its purchases by $10 billion to $75 billion this month. The money created by the stimulus has helped increase liquidity through the global financial system, and given stocks a boost.

How the stimulus is reduced over the coming months will likely hinge on the state of the U.S. labor market. In that context, official payrolls data Friday will be closely monitored.

Earlier in Asia, Tokyo's Nikkei 225 shed 1.5 percent to 15,880.3 and China's benchmark Shanghai Composite Index fell 0.8 percent to 2,027.62. Hong Kong's Hang Seng dropped 0.9 percent to 22,787.33.