February 6, 2014 / 3:38 AM / 5 years ago

Euro, rate futures fall after ECB; global stocks keep gains

LONDON (Reuters) - The euro fell against the dollar and world stocks kept their gains on Thursday as investors looked to see if the European Central Bank would hint at possible future monetary easing after holding interest rates this month.

People walk past an electronic information board at the London Stock Exchange in the City of London October 11, 2013. REUTERS/Stefan Wermuth

Relative calm in vulnerable emerging markets such as Turkey and South Africa also supported risk assets.

Euro zone interest rate futures slipped across the curve after the ECB left its main interest rate unchanged at 0.25 percent, holding off from fresh policy action to combat the threat of deflation.

Investors are awaiting a 1330 GMT news conference by ECB President Mario Draghi, who some expect will sound dovish given a surprise fall in inflation last month.

“Unless the economic outlook transforms very quickly, it (the ECB) won’t be able to resist the pressure for very long,” said Jonathan Loynes, chief European economist at Capital Economics.

“We expect strong hints from Mario Draghi in the press conference that more action is on the way very soon. We still think a small cut in interest rates, with a negative deposit rate, is the most likely next step.”

The euro fell a third of a percent to $1.3495, having been broadly steady before the rate decision.

One-year EONIA forward rates slipped after the ECB’s announcement, while Bund futures hit a session low of 143.68, down 39 ticks on the day. Euribor futures fell across the 2014-2016 strip.

A fall in Euribor futures means investors are paring rate cut expectations. However, prices still suggest the market expects further ECB easing ahead ECBWATCH.

The MSCI world equity index .MIWD00000PUS rose 0.4 percent, while European stocks .FTEU3 were up 1 percent. U.S. stock futures were pointing to a firmer start on Wall Street later.

Relative calm in the capital-hungry emerging markets of Turkey, South Africa and India also lifted developing stocks, after a rout that drove safe-haven bids to U.S. Treasuries and the yen.

Emerging stocks .MSCIEF rebounded 0.7 percent from this week’s five-month lows while the Turkish lira and South African rand held above recent troughs.

The banking sector is in the spotlight after Credit Suisse CSGN.VX missed expectations with a marginal uptick in fourth-quarter net profit, and its shares were down more than 2 percent [ID:nL5N0LB09U].

The dollar rose 0.1 percent against a basket of major currencies .DXY.

Investors are looking for Friday’s highly anticipated U.S. jobs report to show solid growth after encouraging private-sector jobs numbers on Wednesday.

Economists surveyed by Reuters expect Friday’s data will show that employers added 185,000 jobs in January.

U.S. crude oil rose 1 percent to $98.421 a barrel.

Additional reporting by Atul Prakash and Marius Zaharia; Editing by Catherine Evans

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