European stocks firm amid unease over sanctions
July 30, 2014, 12:04 am TWN
LONDON/HONG KONG -- Europe's stock markets edged higher on Tuesday in subdued deals, as traders eyed the prospect of more EU sanctions on Russia over the Ukraine crisis.
London's benchmark FTSE 100 index climbed 0.28 percent to stand at 6,806.92 points in late morning deals in the capital.
In Paris, the CAC 40 increased 0.11 percent to 4,349.41 points and Frankfurt's DAX 30 index added 0.10 percent to 9,607.26.
“European equity markets are subdued amidst concerns about tougher sanctions potentially to be imposed by Western policymakers on Russia,” said ETX Capital analyst Daniel Sugarman.
The EU was set to approve punishing sanctions against Russia on Tuesday over its role in the Ukraine crisis and the downing of Malaysia Airlines flight MH17.
Envoys from the 28 states meeting in Brussels are expected to widen sanctions by approving sector-wide embargoes in four key areas: access to capital markets, defense, dual-use goods and sensitive technologies, including in the energy sector.
“It appears that world leaders have been busy on the diplomatic back channels and managed to agree on tough financial, energy and military action in unison with the U.S.,” added Capital Spreads dealer Jonathan Sudaria.
“Like the prior tit-for-tat exchange of token sanctions between the West and Russia, traders are concerned about how Russia will react and what they deem will be appropriate retaliatory action.”
In Paris, shares in auto maker Renault fell by 3.24 percent to 67.25 euros on disappointing results notably because of poor cash flow.
Asian markets extended their gains Tuesday following a mixed lead from Wall Street as investors await the release of key U.S. data later in the week.
While trade was quiet the advances were fuelled by upbeat corporate earnings, with Japan's Nikkei helped by a weakening yen.
Tokyo rose 0.57 percent, or 88.67 points, to 15,618.07, Sydney ended 0.20 percent higher, adding 11.01 points to 5,588.4 and Seoul added 0.64 percent, or 13.16 points, to close at 2,061.97.
Shanghai gained 0.24 percent, or 5.24 points, to 2,183.19 and Hong Kong was up 0.87 percent, or 211.90 points, at 24,640.53.
Kuala Lumpur, Jakarta, Manila and Mumbai were closed for public holidays.
As Asia's earnings season kicks into gear Japanese firms have fared positively so far. Car giant Nissan on Monday was the first big name to report, announcing a 37 percent jump in net profit thanks to strong overseas sales. Nissan shares rose 3.4 percent on the news early Tuesday.
“Corporate earnings have been improving steadily helped by domestic consumption and capex (capital expenditure),” Shun Maruyama, chief Japan equity strategist at BNP Paribas Securities, told Dow Jones Newswires. “We can anticipate a gradual rising trend.”
The Tokyo market also got support from data showing that a recent decline in household spending eased to 3.0 percent year-on-year in June, which was much smaller than the 8.0 percent dive in May and the 4.6 percent loss in April.
Hiroichi Nishi, general manager of equity at SMBC Nikko Securities, said investors were worried Japan's sales tax hike in April could weigh on results but “excessive concerns are receding.”
Fed Meeting in Focus
On Wall Street the Dow rose 0.13 percent, the S&P 500 was a tad higher and the Nasdaq dipped 0.10 percent.