Stocks flounder in Wall Street's wake, yen rises on BOJ optimism
By Nigel Stephenson
LONDON (Reuters) - European stocks were under pressure on Wednesday, spooked by overnight falls on Wall Street, and the dollar fell against the yen as the Bank of Japan suggested the world's third largest economy needed no additional stimulus for now.
A broad flight to quality helped push low-risk German Bund futures higher and weighed on lower-rated euro zone debt. Gold, also sought as a safe haven, held steady.
Europe's FTSEurofirst 300 share index .FTEU3 was down 0.02 percent by 4.15 a.m. EDT, extending the declines of recent days and taking it further away from the 2014 peak it hit last week.
Rallies in European shares have paused on signs the economic recovery is stuttering. Elections to the European Parliament in coming days are being watched closely for any impact on reforms in several countries.
"We have seen since last Thursday some corrective action in (low-rated euro zone bond) markets ahead of the EU elections. This can go further," said Matthias van der Jeugt, a fixed income strategist at KBC.
The fall in European shares followed a 0.2 percent drop in Tokyo .T and a broad selloff on Wall Street .N, in which Caterpillar (CAT.N: Quote) dropped 3.6 percent after the heavy machinery company said "retail statistics" for the three months to April were down 13 percent.
Tuesday's fall took losses in U.S. stocks to more than 1 percent since the Dow and the S&P 500 hit record closing highs on May 13 as investors seek confirmation the U.S. economy is accelerating.
The BOJ kept monetary policy steady, as expected, and signaled its aggressive stimulus was helping broaden the economic recovery. Governor Haruhiko Kuroda was optimistic Japan was on course to meet the bank's inflation target. Continued...