European stocks, euro rise before Fed stimulus call

European stocks rose on Wednesday and the euro gained against the dollar as traders reacted to a batch of company updates awaiting the outcome of a US Fed policy meeting.

AFP| Updated: Oct 30, 2013, 18:59 PM IST

London: European stocks rose on Wednesday and the euro gained against the dollar as traders reacted to a batch of company updates awaiting the outcome of a US Fed policy meeting.

London`s benchmark FTSE 100 index climbed 0.44 percent to stand at 6,804.45 points in afternoon deals as dealers digested also eurozone economic data.

Frankfurt`s DAX 30 gained 0.30 percent to 9,049.02 points and in Paris the CAC 40 won 0.48 percent to 4,298.66 compared with Tuesday`s closing values.

The Madrid market rose 0.26 percent and Milan advanced by 0.60 percent.

Asian stock markets closed higher after another record finish on Wall Street overnight, but trade was cautious ahead of a Federal Reserve policy decision.

Investors have taken a recent batch of weak US data as evidence to suggest that the Federal Reserve will keep its stimulus programme in place until the new year.

In foreign exchange, the euro climbed to USD 1.3763 from USD 1.3744 late in New York on Tuesday.

The dollar gained to 98.22 yen from 98.17 on Tuesday.

The euro climbed to 85.64 pence against the British pound, which was higher at USD 1.6070.

On the London Bullion Market, the price of gold inched up to USD 1,350.92 an ounce from USD 1,349.25 on Tuesday.

Official data on Wednesday showed unemployment in Germany, Europe`s biggest economy, remains stable, suggesting that private consumption will remain one of the key drivers of recovery,

The number of people registered as unemployed in Europe`s top economy inched up by just 2,000 to 2.973 million in seasonally adjusted terms last month, the Federal Labour Office said in a statement.

EU figures showed that economic and business confidence in the 17-nation eurozone picked up further in October but the pace of improvement had slowed.

Spain meanwhile escaped from a two-year recession in the third quarter of this year with growth of 0.1 percent, separate official data showed.

The "less-than-sparkling European data looks to have been broadly ignored" by markets, said Alastair McCaig, analyst at traders IG.

"European equities have been emboldened by the Dow once again setting a new high last night, and Asian markets` enthusiasm to follow suit.

"The momentum that has swept around the globe looks to have been welcomed, as the German Dax continues to set higher highs, even with the weight of its eurozone neighbours hanging over it," added McCaig.

Markets expect that the Fed -- which will wrap up a two-day meeting on Wednesday -- will keep its USD 85 billion-a-month stimulus in place. But they will pore over its announcement for clues as to when it will start winding down.

The bank had been expected to begin tapering by the end of this year but weak data -- including on jobs growth -- and this month`s two-week government shutdown has made that highly unlikely.

Most traders expect a reduction in bond-buying to begin in early 2014.Shares in Barclays grew 2.73 percent to 273.3 pence as an upbeat earnings report offset news that the British bank has been dragged into a worldwide probe over the possible manipulation of foreign exchange trading.

Barclays, which is still looking to repair its reputation following its role in the Libor interest rate-rigging scandal, said it was unable to predict the fallout of the latest investigation into financial sector activity.

The bank added on Wednesday that it had made a net profit of £511 million (USD 820 million, 597 million euros) in the third quarter.

In Germany, Volkswagen shares jumped 4.55 percent to 182.8 euros after the German carmaker stuck to full-year targets despite a drop in third-quarter earnings.