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European stocks climb before EU summit

European stocks climb before EU summit

Signage is seen outside the entrance of the London Stock Exchange in London. (REUTERS/Peter Nicholls)

LONDON: Eurozone stock markets rose on Wednesday (Apr 10) ahead of a key EU summit, with the smart money on Britain winning a Brexit delay which analysts said would be welcomed by equity investors.

But there was some nervousness about a possible US-EU trade war after a tariff threat by Washington.

Meanwhile, the European Central Bank held key interest rates at historic lows at a regular policy meeting.

At a news conference, bank chief Mario Draghi warned of risks weighing on eurozone growth prospects but dismissed fears of a recession. He also said it was too early to take steps to help out banks whose profit margins have been squeezed by negative interest rates.

The euro traded lower against the dollar after Draghi's remarks, with analysts saying his dim view of the eurozone economy weighed on the currency.

The next big item on the monetary policy agenda was Wednesday's release of minutes from the US Federal Reserve's latest meeting.

The London stock market lagged behind its eurozone peers at the close as the pound strengthened, eating into profits of London-listed multinationals with major earnings in other currencies.

Sterling benefited from the view that a Brexit delay would reduce the chances of a "hard" British exit from the European Union which would be expected to have dire economic consequences.

The currency shrugged off news that the UK economy grew by just 0.2 per cent in February from a month earlier.


Analysts dubbed the combination of the EU summit, the ECB decision and the Fed minutes "Super Wednesday", making for "anything but a boring day in the markets", as Oanda analyst Craig Erlam put it.

"Today is the day we have all been waiting for; the reason why markets have been so subdued at the start of the week," he said.

European leaders were gathering for a summit showdown to decide how long a Brexit delay to grant British Prime Minister Theresa May - and under what conditions.

Without a postponement, Britain is due to crash out of the European Union at midnight on Friday under a "no-deal" Brexit that could trigger economic chaos.

May has embarked on a last-ditch battle to postpone Brexit from Apr 12 to June 30 to arrange an orderly departure - but European leaders are expected to offer her a longer delay, of up to a year.

May said Wednesday she wanted Britain to leave the EU "as soon as possible".

"All eyes are on the EU27 meeting which has the potential to force the UK to choose between no-deal or no-Brexit," said IG analyst Joshua Mahony.

"Meanwhile, US trade wars are back on the agenda," he added.

European and US equities had fallen on Tuesday amid a flare-up in trade tensions between Washington and Brussels.


US President Donald Trump has threatened to impose tariffs on more than US$11 billion of European imports in retaliation over subsidies to aviation giant Airbus, jolting investors.

Airbus stock was down around 1.5 per cent in late European trading on the first day under new chief executive Guillaume Faury.

The stock had already dived 1.86 per cent lower on Tuesday.

The development stoked concerns about the White House's hardline protectionist agenda that has taken aim at its biggest trading partners.

"Friend or foe, the latest headline suggests no country is exempt from the wrath of President Trump's trade agenda," warned Stephen Innes at SPI Asset Management.

Oil prices were higher after OPEC reported sharp declines in output by Venezuela and Saudi Arabia in March.

Key figures around 1540 GMT:


London - FTSE 100: DOWN 0.1 per cent at 7,421.91 points (close)

Frankfurt - DAX 30: UP 0.5 per cent at 11,905.91 (close)

Paris - CAC 40: UP 0.3 per cent at 5,449.88 (close)

EURO STOXX 50: UP 0.2 per cent at 3,424.65

New York - Dow: DOWN 0.1 per cent at 26,121.68


Pound/dollar: UP at US$1.3082 from US$1.3052 at 2100 GMT on Tuesday

Euro/pound: DOWN at 86.04 pence from 86.29 pence

Euro/dollar: DOWN at US$1.1257 from US$1.1263

Dollar/yen: DOWN at 110.91 yen from 111.14 yen


Tokyo - Nikkei 225: DOWN 0.5 per cent at 21,687.57 (close)

Hong Kong - Hang Seng: DOWN 0.1 per cent at 30,119.56 (close)

Shanghai - Composite: UP 0.1 per cent at 3,241.93 (close)


Oil - Brent Crude: UP 64 cents at US$71.25 per barrel

Oil - West Texas Intermediate: UP 29 cents at US$64.27 per barrel

Source: AFP/de


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