Global stock markets drift ahead of Fed statement

MILAN (AP) — Strong eurozone unemployment data gave a modest boost to stock markets on Wednesday, which appeared to be preserving their strength for later in the day when they get data on the U.S. economy and any clues on the Federal Reserve’s policy.

Eurostat figures showed the number of unemployed across the 17 European Union nations fell for the first time since April 2011, providing further hope that the region’s economy could soon start showing signs of recovery.

As welcome as the news was markets were still focused on bigger indicators: U.S. gross domestic product data and news from the Fed’s Open Market Committee meeting.

The Fed is not expected to announce any big changes, but investors will be looking for clues about when it might start scaling back its monetary stimulus.

“Encouraging unemployment data for the eurozone has got things off to a positive start,” said Craig Erlan, market analyst at Alpari Research. “However, investors are clearly focused on one thing today, the FOMC statement.”

Britain’s FTSE 100 rose 0.73 percent to 6,619. Germany’s DAX was down 0.31 percent at 8,2745. France’s CAC-40 lost 0.35 percent to 3,977.

Wall Street looked set for another lackluster day, with Dow Jones industrial futures were up 5 points to 15,498. S&P 500 futures rose 0.05 percent to 1,685.60.

The Fed is buying $85 billion in Treasury and mortgage bonds every month to spur growth and lending. While long-term interest rates have been held near record lows, the program has also drawn investors away from bonds and into higher yielding investments like stocks and commodities. Recent hints that the Fed might start scaling back its stimulus program have sent stocks reeling.

Investors are also waiting for the U.S. government to Wednesday report its first estimate of economic growth for the second quarter. DBS Bank Ltd. in Singapore said analysts are expecting a drop in GDP growth to 1 percent from 1.8 percent. Most economists blame tax increases and government spending cuts for the sluggish second quarter.

Investors are also focusing on U.S. employment figures for July, due out Friday. Fed Chairman Ben Bernanke has said that the central bank could begin to scale back its bond purchases later this year if the economy strengthens, but Fed officials typically put greater weight on employment and inflation data than the GDP figures.

Japan’s Nikkei 225 index tumbled 1.5 percent to close at 13,668.32. The Tokyo benchmark closed down 3.3 percent on Monday and then recovered about halfway Tuesday.

Hong Kong’s Hang Seng fell 0.3 percent to 21,883.66. South Korea’s Kospi dropped 0.2 percent to 1,914.03.

Benchmarks in mainland China rose while Singapore, the Philippines, Thailand and Taiwan fell.

Benchmark crude for August delivery was up 16 cents to $103.24 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.47 to close at $103.08 on the Nymex on Tuesday.

In currencies, the euro rose to $1.3261 from $1.3259 late Tuesday. The dollar fell to 97.71 yen from 98.06 yen.


Pamela Sampson in Bangkok contributed.

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