German data lifts shares as Fed decision approaches

Wed Dec 18, 2013 8:00am EST
 
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By Marc Jones

LONDON (Reuters) - The dollar and U.S. Treasury yields crept higher along with world shares on Wednesday, as markets braced for what was expected to be a very close call on the future of the Federal Reserve's massive stimulus program.

The debate over when the Fed will begin to halt the flow of cheap dollars has dominated trading worldwide for months due to fears that it may trigger a turbulent reaction from investors who have become all too used to the support.

A majority of economists polled by Reuters expect the Fed to wait until March before it starts the process, but recent encouraging data from the U.S. and other parts of the world have raised the odds of a move in January, if not now.

Wall Street was seen opening up around 0.3 percent though most investors were expected to be keeping to the sidelines.

"Probably the strongest encouragement for tapering to begin this evening is the stability in financial markets," said Derek Halpenny, European head of global markets research at Bank of Tokyo-Mitsubishi UFJ.

"Our hunch is that a taper announcement may well encourage a year-end rally in global equity markets as an element of policy uncertainty is cleared," he said, adding the dollar should also do well against the yen.

The predictions already appeared to be coming true as the final countdown began.

European shares on the bluechip FTSEurofirst 300 .FTEU3, rose 0.9 percent, helped by another dash of morale-boosting German sentiment data, while the dollar was firmer against both the yen and the euro.   Continued...

 
Pedestrians are reflected in an electronic board showing stock prices outside a brokerage in Tokyo December 12, 2013. REUTERS/Yuya Shino