Stocks rise, German yields dip after bond sale
LONDON (Reuters) - Stock markets steadied on Wednesday, helped by improved economic growth in France and relatively successful sales of the European government debt at the heart of two weeks of bond market turmoil.
Expectations of further monetary stimulus in China kept Asian markets in positive territory and stocks futures pointed to Wall Street opening higher ahead of retail sales numbers later in the day. [.N]
The best French growth reading in two years added to signs, including from Spain, that some of Europe's weaker southern economies are picking up. Germany missed forecasts, however.
Germany and Italy both successfully sold government debt, and yields on the secondary market fell, but traders were skeptical as to whether this meant three weeks of turmoil on the world's major bond markets was over.
"I don't think this auction can be seen as a trigger for going back to the trend of lower yields," said Jean-Francois Robin, head of strategy at Natixis. "It (the sell-off) is probably not over yet."
Europe's main stock markets were all higher. Paris led with a 1.4 percent gain and Germany's DAX index gained 0.8 percent.
German 10-year bond yields, which have jumped around half a percentage point from record lows hit in mid-April, fell 6 basis points to 0.62 percent. The euro gained 0.1 percent on the dollar to $1.1224.
Tradition broker Mike Reuter said: "I think between now and Friday you'll see the (stock) market up unless there is some major piece of news."
Earlier, Asian shares advanced as investors focused on hopes of further stimulus from Beijing to prevent a sharper slowdown in the world's second-largest economy.
MSCI's broadest index of Asia-Pacific shares outside Japan was off session highs but still up 0.3 percent.
"Expect the pace of easing to be increased, or at least maintained, by the authorities through the year, in order for the GDP target of 7 percent to be attained," said Chester Liaw, economist at Forecast Pte in Singapore.
The People's Bank of China cut its benchmark one-year lending and deposit rates by 25 basis points on Sunday, the third cut in six months. Economists expect more cuts to follow.
Japan's Nikkei stock index erased early losses and ended up 0.7 percent, shrugging off a weak cue from Wall Street.
Crude oil added to its overnight gains as the weaker dollar lifted commodities denominated in the currency, and after OPEC raised slightly its forecast for world oil demand growth.
Brent was up 0.5 percent at $67.18 a barrel after rallying 3 percent on Tuesday, while U.S. crude rose 0.7 percent to $61.17.
(Additional reporting by John Geddie in London, Kevin Yao in Beijing and Masayuki Kitano in Singapore; Editing by Jeremy Gaunt)