Caution rules as investors await central bank moves

Wed Apr 3, 2013 8:10am EDT
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By Richard Hubbard

LONDON (Reuters) - World shares, the euro and German bonds barely moved on Wednesday as investors turned cautious before this week's policy decisions by the Bank of Japan and European Central Bank, followed by U.S. jobs data.

However, U.S. stock futures pointed to a firmer open on Wall Street where both the Standard & Poor's 500 Index .SPX and the Dow .DJI posted record closing highs on Tuesday, while rising oil stockpiles sent crude prices lower. .N <O/R>

On Thursday the ECB is forecast to leave interest rates unchanged but expectations are high that Japan's central bank will announce a forceful monetary easing to try to boost its recession-bound economy.

America's nonfarm payrolls report is likely to confirm market views that the Federal Reserve will maintain its extremely accommodative monetary policy, which has underpinned investor sentiment all year.

"People ... are keeping their positions quite tight ahead of central bank meetings and data later this week," Ioan Smith, strategist at Knight Capital, said. "Even though the chances of a surprise may be small, you don't want to be caught the wrong way if there is one."

Before all these events European equity markets were taking a breather, having posted big gains on Tuesday. The FTSE Eurofirst 300 index of top European shares .FTEU3 was unchanged by midday, after surging 1.3 percent the previous day.

London's FTSE 100 .FTSE, Paris's CAC-40 .FCHI and Frankfurt's DAX .GDAXI were around 0.2 percent lower, giving back a little of Tuesday's strong gains. .L.EU

The MSCI world index .MIWD00000PUS, which covers over 9,000 shares in 45 countries, was flat at 360.2 points but is hovering just below levels last seen in 2008.   Continued...

A man is reflected on a stock quotation board outside a brokerage in Tokyo March 25, 2013. REUTERS/Issei Kato