European markets rose and Wall Street was poised for a higher open Monday as hopes the Federal Reserve might take action to keep the United States from slipping back into recession offset fears of a global slowdown.
Brent crude fell to near $106 a barrel as Libyan rebels captured most of Tripoli, bolstering hopes that oil exports from the OPEC country could resume soon.
Investors in Europe and the United States appeared to recover from a spout of panic selling late last week, when they dumped shares and bought up save-haven assets like gold and the Swiss franc amid concerns about the health of the American and global economies.
However, analysts warned that markets would likely stay volatile in the coming weeks as worries remain about levels of bank funding without a lasting solution for Europe’s debt troubles.
In London, the FTSE 100 jumped 1.1 percent while the DAX in Frankfurt inched up 0.4 percent. The CAC 40 in Paris gained 1.5 percent.
Wall Street was also set to open higher.
The improved mood came following a jittery day of trading in Asia, where most markets closed in the red.
Throughout the week, investors will be looking with anticipation to a speech Friday by the Federal Reserve chairman Ben S. Bernanke at a retreat in Wyoming.
The Fed pledged earlier this month to keep interest rates super-low through mid-2013. Investors wonder whether Bernanke will announce, or at least preview, further steps to help the economy including a third round of bond purchases known as quantitative easing.
“Given the absence of deflation risk, we do not expect him to announce QE3,” analysts at UniCredit in Milan wrote in a note, referring to a new round of bond buying. “But he is likely to reiterate that the Fed is prepared to ease monetary policy further if needed.”
With no crucial economic indicators scheduled for Europe Monday, investors will be looking at the European Central Bank’s disclosure of how much money it spent on government bonds from struggling countries like Italy and Spain last week. Analysts expect the figure to reach around 15 billion euros or $21.6 billion, down from a record 22 billion euros or $28.8 billion the week before.
Even though most economists see the central bank’s purchases as only temporary sticking plaster in the euro zone’s fight against the debt crisis, they have succeeded in keeping the yields, or interest rates, on Italian and Spanish 10-year bonds below 5 percent, more than a percentage point below record levels seen in the week before the ECB resumed its bond buying program.
Over the weekend, Chancellor Angela Merkel of Germany and the president of the European Union Herman Van Rompuy both ruled out the introduction of eurobonds — debt backed by all 17 euro countries — anytime soon, squashing investor hopes that a more lasting solution to the currency union’s debt troubles may be in the works.
Germany’s finance minister, meanwhile, sought to calm fears that growth in Europe’s biggest economy was running out of steam, saying the Germany economy was still on course to grow by 3 percent this year despite an unexpectedly weak second-quarter performance.
Earlier in Asia, markets ended the day mostly in negative territory, as investors reacted to a steep sell-off of U.S. stocks Friday.
Japan’s Nikkei 225 index lost 1 percent to close at 8,628.13 — a five-month low — as a persistently strong yen rattled nerves. A strong yen hurts exports by making them more expensive.
Japan intervened in currency markets earlier this month to try to reverse the yen’s climb. The decision to sell the yen and buy the dollar worked initially, sending the greenback toward 80 yen. But the dollar has been weighed down by the dimming outlook for U.S. economy and is back down to mid 76-yen levels.
The Shanghai Composite Index lost 0.7 percent to 2,515.86 while the Shenzhen Composite Index lost 0.9 percent to 1,124.17. Hong Kong’s Hang Seng, meanwhile, swung into positive territory to eke out a 0.5 percent gain at 19,486.87.
Asian markets were the first to open after the developments in Libya, with the apparent crumbling of Moammar Gadhafi’s regime after rebels entered the capital of Tripoli on Sunday. Oil prices are expected to fall if the situation can quickly stabilize.
In London, Brent crude for October delivery dell $2.22 per barrel to $106.40 on the ICE Futures exchange.
Benchmark oil for September delivery, however, was up 5 cents to $82.31 a barrel in electronic trading on the New York Mercantile Exchange.
Libya used to export about 1.5 million barrels of oil a day, but production all but ground to a halt in recent months as rebels battled to overthrow Gadhafi.
In currency markets, the dollar dipped to 76.78 yen, while the euro rose 0.3 percent to $1.44.
Article source: http://feeds.nytimes.com/click.phdo?i=a17246fadf9874b528ad85d4f6291b52
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