Shares firm, euro dips on confidence in ECB move
By Richard Hubbard
LONDON (Reuters) - European shares touched a fresh five-year high and the euro dipped on Tuesday with speculation mounting that the European Central Bank will signal an easing of monetary conditions at its policy meeting this week.
Still sluggish economic growth across the 17-nation currency bloc and a sharp dip in inflation has increased confidence among many investors that the ECB will at least lay the groundwork for a policy shift at Thursday's gathering.
"We definitely think they are going to signal something," said Luca Jellinek, head of European interest rates strategy Credit Agricole CIB. "For the markets that's the equivalent of doing it really."
The pan-European FTSEurofirst 300 index .FTEU3 set a five-year high for the third time in a week in early trading before steadying again near its previous close as traders worried about extending the rally further. .EU
"We shouldn't see much action before Thursday" when the European Central Bank meets, said Guillaume Dumans, co-head of research firm 2Bremans.
The euro eased 0.2 percent to trade just under $1.35, hovering not far from a seven-week trough of $1.3442 set on Monday when economic data pointing to broadening but still weak recovery across the region.
A report from the European Commission later in the day on the fiscal position and growth outlook for the 17-nation currency bloc could prompt some action. As could producer price data for the region which may add to evidence of a weaker inflation outlook. ECONEZ
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