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World stocks in narrow range as investors eye pro-growth policies, ECB signal rate hikes off
LONDON (AP) ' Stocks traded in narrow ranges on Thursday as investors awaited signals from the heads of the European Central Bank and the Federal Reserve as well as President Barack Obama that they will help shore up economic growth.
While both the Bank of England and the European Central Bank kept their interest rates unchanged, President Barack Obama is expected to announce measures to boost jobs creation in the U.S.
"Global equity markets are attempting to rebound on building hopes for fresh stimulus from the global authorities to support growth," said Lee Hardman, an analyst at the Bank of Tokyo-Mitsubishi UFJ.
In Europe, the FTSE 100 index of leading British shares was flat at 5,318 while Germany's DAX was steady at 5,407. The CAC-40 in France was 0.1 percent higher at 3,076.
Wall Street was poised for modest losses following Wednesday's big gains ' Dow futures were down 0.2 percent at 11,394 while the broader Standard & Poor's 500 futures fell a similar rate to 1,195.
Concerns over the state of the global economy have combined with fears over Europe's debt crisis during the past month to send financial markets spinning. The repercussions of the recent turmoil are being felt in the actions of policymakers, most notably in the European Central Bank.
Instead of continuing on its policy of steadily raising borrowing costs, the ECB is expected to indicate later today that there won't be any more interest rate rises in the months to come as it grapples with a worsening economic outlook as well as the debt crisis, which has already seen three countries bailed out.
Investors will be closely monitoring the press conference from bank chief Jean-Claude Trichet later for indications that rate hikes are off the agenda for now. The bank has twice raised its benchmark rate by a quarter point since April, taking it up to 1.5 percent.
His comments could have a major impact on the euro, which was trading 0.3 percent lower at $1.4038.
Later Thursday, Obama is set to make a speech to Congress about increasing the amount of jobs the U.S. economy is generating. Measures totaling $300 billion are expected to be announced as the president tries to get the unemployment rate down from 9.1 percent.
Meanwhile, there are hopes that the Federal Reserve will soon decide to provide the U.S. economy with another monetary stimulus. The previous $600 billion program, which ended in June, was widely credited for the stock market gains recorded in the first over the year and its ending has been blamed for the ensuing reverse.
Fed chairman Ben Bernanke is also speaking later and investors will be monitoring his speech to the Economic Club of Minnesota for any signs that monetary easing remains an option.
"Will he keep his monetary cards close to the vest....or, will he be more forthcoming with respect to the need for, and type of, stimulus," said Sal Guatieri, an analyst at BMO Capital Markets.
The hopes that policymakers will do more to shore up growth, including at a weekend meeting of finance ministers of the Group of Seven industrialized countries, has helped stocks recover over the past couple of days. A German court decision backing the government's involvement in Europe's bailouts has also helped calm concerns over the debt crisis ahead of a meeting of eurozone finance ministers next week.
Earlier in the day, Asian shares posted modest gains. Japan's Nikkei 225 index rose 0.3 percent to close at 8,793.12 as a softening yen helped Japan's exporters. By late morning London time, the dollar was flat at 77.33 yen.
South Korea's Kospi rose 0.7 percent to 1,846.64, benefiting from a decision by the country's central bank to leave its benchmark interest rate unchanged for a third month. Higher interest rates generally drag on stocks by making them a potentially less attractive investment.
Hong Kong's Hang Seng fell 0.7 percent to 19,912.82 as did shares in mainland China ' the benchmark Shanghai Composite Index fell 0.7 percent to 2,498.94 while the Shenzhen Composite Index lost 1 percent to 1,100.53.
The more buoyant tone in stock markets over the past couple of days has helped oil prices rally. Benchmark crude for October delivery was up 3 cents at $89.37 a barrel in electronic trading on the New York Mercantile Exchange.
Pamela Sampson in Bangkok contributed to this report.