Hong Kong - The euro rose with European stocks as investors awaited progress on Greece’s debt crisis. The pound rallied and gilts dropped after a Bank of England committee member hinted at rate increases.
The euro was higher against most peers except the pound by 8.23am in London, gaining 0.3 percent versus the dollar after plunging on Tuesday. The Stoxx Europe 600 Index added 0.2 percent and US index futures were little changed. Japanese shares hit an 18-year high and Chinese shares rose a second day. The pound strengthened 0.4 percent after Martin Weale told the Financial Times the central bank should be ready to raise rates as early as August.
With less than a week until Greece’s bailout expires, Prime Minister Alexis Tsipras visits Brussels on Wednesday for discussions with creditors. The Bloomberg Dollar Spot Index surged the most in more than two weeks on Tuesday as comments by Federal Reserve Governor Jerome Powell fed speculation that US monetary policy’s split from other major economies will accelerate. The US updates on first-quarter gross domestic product, while German business sentiment reports are due.
“It’s probably 2-to-1 that we’ll get the deal on Greece because it’s probably the best deal they’re going to get,” David Joy, chief market strategist for Ameriprise Financial, said from Boston in a Bloomberg Television interview. “That will allow the market to focus on the fundamentals there, which are getting better, and of course we have a massive QE programme.”
VAT dispute
The euro advanced to $1.1197 after sinking 1.5 percent on Tuesday, the most since March. The joint currency bought 138.85 yen. Ten-year German bunds were little changed.
As well as convincing creditors that his government is serious about implementing its latest proposals, Tsipras needs to shore up support at home. A key sticking point is the rate of value-added tax, with the proposed target for 2016 short of creditor demands, according to two European Union officials.
More than half of the 19 industries climbed on the Stoxx 600, which jumped 1.2 percent on Tuesday.
The pound bought $1.5788 and the yield on 10-year gilts climbed three basis points after Weale, a member of the monetary policy committee, said strong wage data points toward higher rates.
The yield on 10-year Treasury notes was 2.40 percent. Similar maturity Japanese notes followed last session’s drop in US debt, with yields rising 0.5 basis point to 0.46 percent.
Dollar index
Bloomberg’s dollar gauge, which tracks the US currency against 10 major peers, slipped 0.1 percent after rising more than 1 percent the past three trading days. South Korea’s won slipped 0.3 percent and Malaysia’s ringgit weakened 0.5 percent.
The Fed’s Powell said on Tuesday that chances are about 50-50 that the US economy will have improved enough to warrant a rate increase in September. He also expects policy makers to move again in December.
The Nikkei 225 rose to 20,868.03, surpassing its dot-com era top, while the broader Topix index added 0.2 percent to its strongest close since August 2007. The yen, which typically moves at odds with local stocks, was little changed at 123.99 per dollar after a two-day drop of 1 percent.
The Hang Seng China Enterprises Index, a gauge of mainland companies listed in Hong Kong, added 0.7 percent. The Shanghai Composite Index rose 2.5 percent after Tuesday’s 2.2 percent jump. The gauge plunged 13 percent last week, the worst weekly loss since the 2008 global financial crisis.
West Texas Intermediate crude increased 0.3 percent to $61.18 a barrel, while Brent crude rose 0.2 percent to $64.60.
Data from the US government on Wednesday may see oil inventories cap their longest stretch of declines in seven years, soothing concerns over supply that fuelled last year’s 46 percent price slump. An industry report showed a 3.2-million barrel drop in the week, according to ForexLive.
Copper for three-month delivery on the London Metal Exchange rose 0.2 percent to $5,789 a metric ton. The industrial metal rallied 2.2 percent on Tuesday after two days of losses.
* With assistance from Yuji Nakamura in Tokyo and Emma O’Brien in Wellington
Bloomberg