🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

Deutsche helps lift European stocks before Yellen, Draghi

Published 09/28/2016, 04:52 AM
© Reuters. Traders work at their desks in front of the German share price index DAX board in Frankfurt

By Nigel Stephenson

LONDON (Reuters) - A rise in Deutsche Bank shares helped push European stocks higher on Wednesday, easing concerns over Germany's financial sector that had hit equities in Asia and drove investors into safe-haven government bonds and the dollar.

Beyond banking sector worries, investors were looking ahead to U.S. Federal Reserve Chair Janet Yellen's appearance before a Congressional committee, a speech by European Central Bank President Mario Draghi and a meeting of oil producers in Algiers

Deutsche, Germany's biggest lender, faces big fines over claims it mis-sold mortgage-backed securities and, like other euro zone lenders, has been squeezed by the European Central Bank's low interest rates. Its shares, which hit record lows on Tuesday have fallen some 50 percent this year (DE:DBKGn).

However, the stock rose more than 3 percent in early deals, helping push the pan-European STOXX 600 index (STOXX) up 1.2 percent, led by banks (SX7P).

Analysts said sentiment towards riskier assets was also improved by data on Tuesday showing U.S. consumer confidence this month hit its highest since 2007.

For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

German two-year government bonds , however, held near Tuesday's record low of minus 0.711 percent. Before an auction of the bonds due later on Wednesday, they yielded minus 0.702 percent, flat on the day.

Asian shares spent much of the trading session in negative territory, on investor concern about the state of the European banking sector and lower oil prices.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) moved in and out of negative territory and last stood less than 0.1 percent higher on the day.

Japanese shares fell, with the Nikkei 225 index (N225) falling 1.3 percent by the close.

Oil prices were slightly higher, partially reversing Tuesday's fall of some 3 percent on diminished expectations that oil producers meeting in Algiers this week would reach an agreement to ease a global glut of crude.

Members of the Organization of the Petroleum Exporting Countries (OPEC) are due to meet at 1400 GMT. Some in the market say the Algiers talks could lay the groundwork for an agreement at OPEC's formal policy meeting in Vienna on Nov. 30, said Vyanne Lai, oil analyst at National Australia Bank in Melbourne.

"I think OPEC producers realize they can't continue to expand production indefinitely - OPEC producers are close to maximum capacity - so there could be room for a deal (in November)," Lai said.

Brent crude (LCOc1), the international benchmark, last traded at $46.08 a barrel, up 11 cents on the day on data showing a surprise drawdown in U.S. inventories.


The dollar < (DXY) was up 0.3 percent against a basket of currencies. Fed chief Yellen testifies before the House Financial Services Committee on regulation but may face questions on the interest rate outlook and the economy.

The Fed left rates on hold last week but strongly signaled they could rise in December.

ECB head Draghi speaks in Berlin.

The euro fell 0.2 percent to $1.1188 .

"While we admit that near-term downside risks to the euro have increased due to financial stability concerns we think that any setback into the $1.11 handle offers a buying opportunity," Hans Redeker, head of currency strategy at Morgan Stanley (NYSE:MS) said.

© Reuters. Traders work at their desks in front of the German share price index DAX board in Frankfurt

The yen weakened 0.3 percent to 100.70 per dollar and sterling dipped 0.2 percent to just below $1.30.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.