LONDON (Reuters) - European shares fell and U.S. futures pointed to a weaker open on Wall Street on Thursday after disappointing results from tech heavyweights Google and IBM, while the dollar fell on dovish U.S. Federal Reserve comments.
Futures prices suggested U.S. stocks will open 0.2 percent lower. Google released earnings data after U.S. markets shut on Wednesday, showing that first-quarter revenue fell short of Wall Street targets and that margins narrowed.
IBM Corp reported after hours on Wednesday its lowest quarterly revenue for five years as it struggles with falling demand for storage and server products.
U.S. stocks had ended Wednesday with gains of 1 percent.
European stocks fell 0.25 percent ahead of the Easter holiday weekend. They were hit by a profit warning from French spirits maker Remy Cointreau and a fall in sales at UK spirits company Diageo as the Chinese government cracks down on ostentatious spending. Concern over the tense situation in Ukraine also weighed on the market.
In addition, export-driven European companies have been hurt by the strength of the euro, which makes their products more expensive in other currencies.
“I don’t think first quarter earnings will be great, as you’ve still got a relatively high euro, which will cause a drag on year-on-year figures,” said Nick Nelson, European equity strategist at UBS.
The dollar and U.S. Treasury yields fell after Fed Chair Janet Yellen on Wednesday said it might take two years to return to full employment and there was more risk of inflation staying too low than going too high.
Achieving the Fed’s economic goals “will likely require low real interest rates for some time”, a policy view she said was shared broadly across many advanced economies.
“Yellen’s comments have hurt the dollar as she has indicated that the Fed is in no hurry to raise rates,” Societe Generale currency strategist Alvin Tan said.
“With U.S. yields at the bottom of its recent range, we expect the dollar to remain soft. Only when yields pick up and the market focuses on rate hikes by the Fed will the dollar start to rally. That we expect some time in the third quarter of this year.”
Yields on Treasury 30-year bonds dipped to their lowest since June at 3.44 percent. German Bund futures rose 2 ticks to 144.38.
The dollar eased 0.14 percent to 102.08 yen. The euro was 0.27 percent firmer at $1.3851.
Sterling hit a 5-1/2 year high against a basket of currencies as recent data strengthened investor confidence in Britain’s economic outlook.
Bonds in peripheral Europe extended their spectacular rally amid speculation that persistently low inflation would force the European Central Bank to launch further stimulus.
Yields on Spanish 10-year debt sank to their lowest in over eight years at 3.044 percent, while Italian 10-year yields hit an all-time trough around 3.1 percent.
The yield on the first bond Greece sold after its 2012 default dipped just below its issuance levels, as Athens rejoined the ECB-inspired peripheral debt rally following a brief period of selling pressure.
The situation in Ukraine remained tense, with the interior minister saying on Thursday that three pro-Russian separatists had been killed in shooting overnight in the town of Mariupol on the Sea of Azov.
Ukrainian, Russian and Western diplomats arrived for emergency talks in Switzerland, but there was little hope of them making progress in resolving a crisis that has seen armed pro-Russian fighters seize whole swathes of eastern Ukraine.
Spot gold steadied at $1,298.50 an ounce, having found support around $1,290/1,293 after a technical selloff this week.
Brent crude for June dipped 11 cents to $109.49 a barrel though U.S. crude rose 24 cents to $104, with the Ukraine tensions heightening concerns over Russian supplies.
Additional reporting by Wayne Cole in Sydney and Anirban Nag and Alistair Smout in London