Euro zone inflation confirmed at 0.2 percent in December

Euro zone inflation was confirmed at 0.2 percent in December, the European Union's statistics office data showed on Tuesday, with prices going up in restaurants and cafes and falling the most for fuel.

Eurostat confirmed its earlier estimate that consumer prices in the 19 countries sharing the euro were flat month-on-month in December for a 0.2 percent year-on-year rise.

However, the statistics office revised down the inflation number for November to 0.1 percent year-on-year from 0.2 percent reported earlier.

Excluding the volatile prices of unprocessed food and fuel, or what the European Central Bank calls core inflation, prices in December grew 0.3 percent month-on-month and 0.9 percent year-on-year, the annual change the same as in November.

The ECB wants to keep inflation below, but close to 2 percent over the medium term. To accelerate price growth the bank last year launched a government bond buying program to flood the market with cash and boost demand.

The biggest downward pull on the index came from prices of fuel for transport, which subtracted 0.4 percentage points.

The price of a barrel of Brent crude has fallen further in January, slumping on Tuesday to below $28 per barrel, its lowest level since 2003, as the market anticipated a rise in Iranian exports after the lifting of sanctions against Tehran over the weekend.

European shares slip as worries over China linger

European shares inched down towards their lowest level in more than three months on Monday as doubts grew about Beijing's ability to manage the world's second-biggest economy.

The pan-European FTSEurofirst 300 index fell 0.1 percent, near its lowest level since late September. Britain's FTSE 100 declined 0.4 percent while Germany's DAX weakened by 0.3 percent.

China let its yuan currency strengthen for a second straight session on Monday, in a move that might calm concerns about how ready Beijing is to let the currency depreciate.

However, the development added to doubts over Beijing's ultimate policy intent, and it failed to stop investors selling Chinese shares.

Figures out over the weekend also showed Chinese consumer inflation stuck at a subdued 1.6 percent in December, while producer prices were down a steep 5.9 percent on the year - a deflationary pulse that is being felt across the globe.

Euro falls as investors' appetite for risk stabilizes

The euro fell towards a one-month low against the dollar on Tuesday, as risk appetite stabilized following a volatile Monday when weak Chinese data and a breakdown in relations between Saudi Arabia and Iran prompted a stock market sell-off. 

The dollar had hit an 11-week low against the Japanese currency JPY= on the first trading day of the year as Chinese share prices slid and traders ran for the traditional security of the yen and the Swiss franc.

But world stocks inched off 2-1/2 month lows on Tuesday as China pumped in an estimated $20 billion to stabilize local equity and currency markets, and the dollar was off its lows against the yen.

European bourses meanwhile opened higher after the previous day's steep losses.  Against the yen, the euro fell 0.7 percent to an eight-month low of 128.55 yen EURJPY=.

The euro fell 0.3 percent to $1.0795 EUR=. It has tended recently to perform well at times of market uncertainty as investors who had held euro-funded carry positions, in which the a low-yielding currency is borrowed and then sold in favor of a riskier higher-yielding one, have bought back euros.

Traders will be watching euro zone flash inflation data due at 1000 GMT, following weaker-than-expected German and Spanish inflation numbers on Monday.

Analysts at Commerzbank said an argument could be made for further rate cuts if the data missed forecasts for a 0.3 percent annual pick-up, prompting the European Central Bank to again lower its inflation projections.

Shanghai shares managed to limp up 0.2 percent on Tuesday after Chinese regulators said they may restrict stock sales by major shareholders.

The Euro Traded

The euro traded at $1.0581 EUR=, down 0.1 percent on Monday and 3.8 percent on the month, edging near a seven-month low of $1.0565 touched on Wednesday.

The prospects of an ECB easing also is putting pressure on the central bank of Switzerland, surrounded by euro zone countries, to take similar actions to stem any strengthening in the Swiss franc.

That pushed the franc to a five-year low of 1.0328 franc to the dollar on Friday. It last stood at 1.0316. CHF=.

In contrast, the dollar is supported as the Federal Reserve is widely tipped to hike U.S. interest rates at its mid-December policy meeting. The dollar index =USD .DXY rose to an eight-month high of 100.23.

The yen stood little changed at 122.73 yen JPY=, largely shrugging off data showing Japan's industrial output rose slightly less than expected in October.

Draghi says ECB willing to act fast on rates, QE to boost inflation

The European Central Bank is ready to act quickly to boost anemic inflation in the euro zone, its president said on Friday, highlighting changes to its asset purchase program and deposit rate as possible tools.

Mario Draghi's comments offered the strongest hint yet that the ECB will unveil fresh stimulus measures at its Dec. 3 meeting to stop inflation from falling further below its target of just under 2 percent.

The ECB has bought 60 billion euros ($64 billion) a month of mostly government bonds since March to help revive inflation, but prices rose just 0.1 percent in October.

Draghi defended the ECB's quantitative easing (QE) asset purchase program, saying it had brought down borrowing costs for euro zone companies. He said the scheme could be expanded and extended and its composition changed to provide further stimulus.

He said the ECB could also change the level of its deposit rate to boost the impact of QE. The ECB's deposit rate is currently -0.20 points, meaning banks are charged to park cash at the ECB, giving them an added incentive to lend, rather than pile reserves at the central bank.

Markets are expecting further ECB action on Dec. 3, most likely including a further cut to the deposit rate and an extension of the asset purchases beyond their scheduled end in September 2016.

European stock markets rally at open

European stocks rose sharply in opening trade on Tuesday, as investors continued to show resilience after Friday's deadly terror attacks in Paris.

The French capital's benchmark CAC 40 index of top companies gained 0.96% to 4 850.29 points compared with Monday's close.

Frankfurt's DAX 30 index advanced 0.91% to 10 810.92 and London's FTSE 100 jumped 1.15% to 6 216.84.

The region's markets held their ground on Monday, finishing on a flat note in nervous but volatile trade.

Most Asian stock markets advanced strongly on Tuesday, as the initial shock from the devastating Paris attacks wore off.

While Friday's carnage, which left 129 people dead, fuelled fears in the region about the effects on the already troubled European economy, confidence was buoyed by a defiant reaction around the world.

Global Markets

European equities had also held firm on Monday, with the pan-European FTSEurofirst 300 index edging up 0.16 percent and France's CAC dipping only 0.12 percent.

"In light of all the tragedy in France, it is refreshing to see that the terrorists did not successfully terrorize the financial markets...and even though investors sold the EUR/USD, the decline could have been a lot steeper.

The dollar rose to a 1-week high of 123.405 yen , a safe-haven currency usually sought in times of geopolitical tension. The greenback also rose to an 8-month high against the Swiss franc, another haven.

The euro dipped to $1.0656, a 7-month trough. Crude extended gains after the Paris attacks raised geopolitical tensions that were seen to threaten global oil supply. [O/R]

Brent crude nudged up 0.2 percent to $44.64 a barrel, adding to overnight gains of 2.2 percent.

Spot gold was little changed at $1,081.77 an ounce. The precious metal pared gains overnight as an initial flow of flight-to-safety buying after the Paris attacks petered out.

Investor focus has returned to a potential rate hike by the Fed in December. Higher interest rates would diminish the allure of the non-interest-paying gold.

European Stock Market News - The Euro Wobbles

Euro wobbles on Portuguese risk, Aussie takes China data in stride

The euro wobbled on Wednesday as political uncertainty in Portugal weighed on the currency already bracing for further monetary policy easing from the European Central Bank.

The Australian dollar, often used as a proxy of China-related trades, took in stride data that showed industrial production growth in the world's second largest economy was roughly in line with expectations. ECONCN

The euro last stood at $1.0757 EUR=, recovering after having slid below $1.0700 for the first time in over six months overnight. On Tuesday, it fell as far as $1.0674 after breaking below Friday's trough of $1.0704.

Investors took aim at the euro after Portugal's minority government collapsed as left-wing parties ousted the ruling centre-right. It was the first such move against an elected government since the end of dictatorship in 1974.

In contrast, expectations that the Federal Reserve will hike U.S. interest rates in December for the first time in nearly a decade were keeping the greenback underpinned.

With the euro under pressure, the dollar index .DXY broke back above its post-payrolls high of 99.345 to scale a fresh seven-month peak of 99.504.

European stock markets rise at open

Europe's main stock markets rose at the start of trading on Tuesday, rebounding from the previous day's losses.

London's benchmark FTSE 100 index gained 0.47% to 6 325.01 points compared with Monday's close.

In the eurozone, Frankfurt's DAX 30 index won 0.29% to 10 846.96 points and the Paris CAC 40 climbed 0.53% to 4 937.37.

Mounting expectations that the United States will raise interest rates in December for the first time in nine years dominated world financial markets Monday, weighing on stocks but underpinning the dollar.

European Stock Market News - European Shares Higher

European shares edge up led by Renault

Telecom Italia rose sharply for a second day.

European shares edged higher in opening deals on Friday, and were set for a positive close on the month, with gainers led by car maker Renault after a rise in quarterly profits and phone group Telecom Italia on stake building news.

The pan-European FTSEurofirst 300 index was up 0.2%, while the eurozone's blue-chip Euro STOXX 50 index  also gained 0.2%.

The pan-European FTSEurofirst 300 is up more than 8% so far in October, as the European Central Bank (ECB) has signalled the possibility of stronger stimulus measures.

Renault rose 5.8% after third-quarter revenue increased 9.4%, lifted by growing business with partners Nissan and Daimler, as well as sales of its own new models in a rebounding European market.

Analysts at SocGen and Nomura lifted their target prices on Renault to €101 and €107 respectively, both keeping a buy rating on the stock.

Telecom Italia rose sharply for a second day to gain more than 3% after the founder of Iliad raised a stake in the Italian telecoms group to 15%.

But British Airways owner IAG fell 4.6% despite upgrading its 2015 profit outlook after third-quarter results beat expectations.

European Stock Market News - European Shares Rose

European stocks firm, dollar near two-and-a-half-month highs as Fed revives Dec hike talk

Europe Shares Rise

European shares rose, while the U.S. dollar stood near 2 1/2 month highs against the euro on Thursday, after the Federal Reserve gave a vote of confidence to the U.S. economy and revived expectations it may raise interest rates by year-end.

The Fed, which kept its rates on hold as expected, took the unusual step of strengthening its language about timing in its statement, bringing a December rate hike back on the table.

In another hawkish tilt, the Fed also took out a warning about slowing global growth, going against earlier speculation that China's cooling economy could delay a rate hike in the United States. 

The pan-European FTSEurofirst 300 index .FTEU3 was up 0.3 percent at 1,489.45 points by 0811 GMT, while Japan's Nikkei share average .N225 gained 0.2 percent to close at 18,935.71.

That came after Wall Street ended a volatile session with solid gains, underpinned by the Fed's vote of confidence in the U.S. economy. The Fed's relatively upbeat stance came despite recent worries about global growth due to a slowdown in China.

In overnight trade, U.S. Treasury yields and the dollar rose while shares initially sold off and then reversed, after the Fed explicitly referred in its statement at the end of its two-day policy meeting, to conditions necessary "to raise the target range at its next meeting." Reference to a particular meeting is rare for the Fed.

European Stock Market News - ECB Meeting

Euro edges up but top-heavy as investors await ECB meeting

Euro coins are seen in front of displayed flag and map of European Union

The dollar edged slightly down against the euro on Thursday, but its losses were limited ahead of a European Central Bank meeting later in the day that could pave the way for further quantitative easing.

The ECB is likely to stop short of actually taking new policy steps at the meeting as it awaits fresh indications about the outlook for flagging euro zone inflation.

"It seems Mario Draghi will try and keep a lid on EUR moves so it may be really hard and risky to be long EUR/USD," he added.

The median probability of the ECB extending its 1 trillion euro ($1.13 trillion) asset purchase program beyond its current end date of September 2016 was 70 percent, according to a recent Reuters poll of economists. 

The same poll saw a 40 percent chance that the ECB would increase its monthly purchases over the next six months.

The euro was up about 0.1 percent on the day at $1.1345 EUR=, holding above a 10-day low of $1.1306 touched on Monday but still shy of last week's levels above $1.400.

Against its Japanese counterpart, the dollar inched down about 0.2 percent to 119.69 yen JPY=, mired in a familiar range ahead of next week's policy meetings by both the U.S. Federal Reserve and the Bank of Japan.

One-month dollar/yen implied volatility JPY1MO=, which measures the cost of hedging against sharp swings in the yen, stood at 8.250 percent on Thursday.

The U.S. dollar was buying C$1.3117 CAD=D4, down about 0.2 percent from late North American trading after earlier rising as high as C$1.3149, its loftiest peak since Oct. 5.

European Stock Market News - Euro Inched Up

Euro takes back some ground lost to dollar ahead of ECB

A picture illustration shows Euro and U.S. dollar banknotes in Sarajevo March 9, 2015.

The dollar gave back some of its overnight gains against the euro on Tuesday after hitting a 10-day high ahead of this week's European Central Bank meeting, which some investors believe could set the stage for additional stimulus later this year.

The Canadian dollar, meanwhile, edged lower against its U.S. counterpart after Liberal leader Justin Trudeau won a stunning election victory over Prime Minister Stephen Harper's Conservatives.

The euro inched up slightly to $1.1331 EUR=, after dropping as low as $1.1306 on Monday, but its gains were seen limited ahead of Thursday's ECB meeting as it comes against a backdrop of deflationary pressure.

Lower oil prices helped push euro zone consumer prices into negative territory last month, which some believe could prompt the ECB to eventually expand or extend its asset purchase program.

Many economists believe such a move would be most likely to come in December if the ECB's quarterly economic forecasts due early that month prove disappointing.

Economists polled by Reuters expect the ECB to extend its plan to buy 60 billion euros of assets a month of mostly government bonds beyond its planned end-date of September 2016.After the ECB, investors' main focus will be the U.S. Federal Reserve's policy meeting on Oct. 27-28. [FED/DIARY]

Investors remain divided about whether the U.S. central bank will deliver its first rate hike since 2006. Interest rate futures indicated on Monday that traders were pricing in a 52 percent chance of the Fed raising rates in March 2016, according to the CME Group FedWatch.