World markets await US Federal Reserve's economic assessment

 

London

Stock markets traded within fairly narrow ranges today after big
declines the previous day as investors awaited the latest assessment of
the US economy from the US Federal Reserve.

Though the Fed is expected to keep policy unchanged at the conclusion of its meeting later, investors will be interested to assess the tone of its accompanying statement in light of a recent improvement in the US economic newsflow and Europe's debt crisis.

Further signs of stress emerged Tuesday to indicate that Europe's most recent summit agreement to get the euro countries to tighten rules against excessive government spending has only made limited progress in pulling the continent out of its debt crisis.

While figures showed that Europe's banks parked more money at the European Central Bank than they have at any other time this year, Italy's borrowing rates traded at levels not far from those that forced Greece, Ireland and Portugal into seeking financial bailouts.

Investors are nervously awaiting the response of rival agency Standard & Poor's. Last week it warned it could downgrade most of the 17 eurozone economies, including Germany, if the euro deal failed to deliver.

"Markets are now awaiting the result of S&P's post-summit review of the eurozone," said Chris Beauchamp, market analyst at IG Index. "If the agency decides to downgrade any of the big names then life could easily become more exciting."

In Europe, the trading session ended disappointingly and the main indexes in Germany and France ended modestly lower despite being higher for most of the day.

Germany's DAX ended 0.2 percent lower at 5,774.26, while France's CAC-40 fell 0.4 percent to 3,078.72. The FTSE 100 index of leading British shares, however, ended 1.2 per cent higher at 5,490.15.

In the US, the Dow Jones industrial average was up 0.5 per cent at 12,078 while the broader Standard & Poor's 500 index rose 0.4 percent to 1,242.

The advance on Wall Street came despite figures showing that U.S. retail sales rose by a monthly rate of 0.2 per cent in November, below market expectations for a 0.6 per cent increase. November figures are important because it's the start of the key holiday shopping season.

Tuesday's calmer tone in markets was evident for a while in the performance of the euro, which was trading around the $1.32 (£0.85) mark for much of the day. However, concerns over the ability of last week's deal undermined the currency once again, sending it down to 11-week dollar lows of $1.3055 (£0.84).

"The financial markets are now digesting the details of the EU deal struck last Friday, and it is quickly becoming apparent that the financial markets have once again given it the thumbs down," said Derek Halpenny, an analyst at The Bank of Tokyo-Mitsubishi UFJ.

He added that could mean major funding difficulties in the first half of 2012, when European nations, in particular Italy, have sizable sovereign debts that need to be refinanced.

Earlier in Asia, stocks took a battering following the previous day's retreats in Europe and the U.S.
Japan's Nikkei 225 fell 1.2 per cent to close at 8,552.81 while South Korea's Kospi gave up 1.9 per cent to 1,864.06 and Hong Kong's Hang Seng lost 0.7 per cent to 18,447.17. On mainland China, the benchmark Shanghai Composite Index fell 1.9 per cent to 2,248.59, its lowest in closing since March 2009. The Shenzhen Composite Index lost 3 percent to 921.32.

Oil prices recovered some ground ahead of a meeting of the OPEC oil cartel in Vienna, Austria, which is expected to see production levels left unchanged. Benchmark oil for January delivery was up $1.893 (£1.21) to $99.66 (£64.23) per barrel in electronic trading on the New York Mercantile Exchange.

AP

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Guru Careers: Graduate Editor / Editorial Assistant

£16 - 20k: Guru Careers: A Graduate Editor / Editorial Assistant is needed to ...

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine