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May 26, 2017

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Further easing measures possible for ECB: analyst

LONDON/HONG KONG--Markets in Europe brushed aside weakness in Asia on Thursday ahead of the latest policy announcement from the European Central Bank.

Though the ECB isn't expected to make changes to its interest rates or announce another liquidity operation to shore up the banking sector, investors will be interested to hear what its president, Mario Draghi, says in his press conference. With inflation low and most activity indicators pointing to tepid economic growth, most think he will indicate that further easing measures are possible in the months ahead.

"It would therefore be a surprise to see any move on rates today, but that won't mean that his press conference won't hint at the availability of other 'powerful tools' in the central bank's arsenal," said Michael Hewson, senior market analyst at CMC Markets.

In Europe, Germany's DAX rose 0.4 percent to 9,536 while the CAC-40 in France rose 0.2 percent to 4,270. The FTSE 100 index of leading British shares was 0.3 percent higher at 6,739.

Wall Street was poised for a solid opening, with both Dow futures and the broader S&P 500 futures up 0.3 percent.

On Wednesday, most stock markets struggled amid concerns that the Federal Reserve will reduce its monetary stimulus more aggressively than anticipated because of the strength of the U.S. economy.

Asian markets mostly fell Thursday following losses on Wall Street, as minutes from the Federal Reserve's recent policy meeting showed officials are confident the U.S. economy can withstand stimulus cuts.

Tokyo dropped 1.50 percent, or 241.12 points, to 15,880.33 and Seoul fell 0.66 percent, or 12.85 points, to close at 1,946.11.

Hong Kong finished down 0.91 percent, or 209.26 points, at 22,787.33 while Shanghai closed down 0.82 percent, or 16.72 points, at 2,027.62.

Bucking the trend was Sydney, which rose 0.16 percent — or 8.4 points — to 5,324.40, despite news that Moody's had become the second agency to cut Australian carrier Qantas's debt rating to junk status after it announced a profit warning last month.

Qantas climbed 2.27 percent even after Moody's said it now rates the airline Ba2 following Standard and Poor's decision last month to assign it BB+ status.

In Tokyo, the Nikkei-255 fell on continued profit-taking with a weaker yen failing to lift the market into positive territory. Seoul's slide came after South Korea's central bank froze its key interest rate for an eighth consecutive month.

The Bank of Korea kept its benchmark interest rate steady at 2.5 percent and maintained the forecast it made three months earlier that the economy will grow 3.8 percent this year.

In China, official figures showed inflation at 2.6 percent in 2013, well below Beijing's 3.5 percent target. Analysts broadly welcomed the statistics, saying they pointed to a stable outlook for prices and a reduced chance of monetary tightening.

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