Global stocks rally pauses for breath ahead of ECB

Thu Apr 3, 2014 7:34am EDT
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By Jamie McGeever

LONDON (Reuters) - The rise in European stocks this week petered on Thursday after figures showed that economic activity slowed a bit last month and with investors reluctant to add fuel to the rally ahead of the European Central Bank's policy decision later in the day.

It was a similar story in debt markets, where the recent rise in U.S. Treasury yields and fall in peripheral euro zone yields lost much of this week's momentum.

Investors' appetite for risk had been underpinned in recent days by signs of a post-winter improvement in the U.S. economy, expectations Beijing will take steps to boost the Chinese economy and a reduction in emerging market volatility.

On Wednesday the S&P 500 .SPX hit a record high and Asian stocks a four-month peak, while benchmark U.S. 10-year Treasury yields hit a one-month high and Greek 10-year yields posted their biggest one-day fall in two months.

The main focus on Thursday is the ECB's policy meeting. Seventy of 72 economists polled by Reuters expect the ECB to keep interest rates on hold at a record low 0.25 percent.

But with inflation across the 18-nation bloc falling to a four-year low of just 0.5 percent last month, the door is open to further easing, if not today then in the coming months.

"I think actually we need either a rate cut or a specific liquidity measure today - I think if we just get talk, there will be a slight negative response," said Ian Williams, equity strategist at Peel Hunt.

At 4.00 a.m. ET the FTSE Eurofirst 300 index of leading European shares was flat at 1,343 points .FTEU3 and Britain's FTSE 100 index .FTSE was up 0.1 percent at 6,667 points.   Continued...

A man looks at a stock quotation board as passers-by walk past outside a brokerage in Tokyo January 28, 2014. REUTERS/Toru Hanai