European stock futures suggest a higher opening on Tuesday despite uncertainty over future action by the European Central Bank. The ECB said yesterday that speculation about plans to set up a cap on borrowing costs of crisis-hit countries is misleading, as the decisions concerning bond buying have not yet been discussed by the ECB's governing council.
Asian stocks are rising broadly, with Chinese shares up 0.3 percent after the People's Bank of China injected 220 billion yuan ($34.6 billion) into the banking system via reverse-repurchase operations, with an aim to improve liquidity and bolster a slowing economy. China's key money-market rates edged higher as today's relatively large cash injection, the most in a single day, doused hopes of a cut in banks' reserve ratio in the near term.
Key benchmark indexes in Australia, Japan and South Korea are posting modest gains, while Hong Kong's Hang Seng index is down 0.4 percent.
The euro is holding steady against the dollar and yen ahead of a crucial week of meetings with eurozone leaders which could determine Greece's future and the stability of the 17 countries that use the euro.
German Foreign Minister Guido Westerwelle stressed yesterday that his country wants Greece to continue implementing reforms and tough cost-cutting measures it had earlier agreed while availing two massive international bailout loans for avoiding bankruptcy.
Speaking to reporters after talks with his Greek counterpart, Dimitris Avramopoulos, in Berlin, Westerwelle stressed that "a substantial softening of the agreements and the agreed reforms is not possible from the German government's point of view." The German foreign minister also noted that a final decision regarding policy changes should be taken only after the 'troika' of creditors, comprising the IMF, EU and ECB, release their report on Greece next month.
On the macroeconomic front, investors await public sector finance data from the U.K. and the outcome of a short-term debt auction in Spain for further directional cues. Across the Atlantic, reports on existing home sales and new home sales due this week will provide some clues about whether the Fed would ease its policy in September.
In domestic corporate news, Swiss private-banking group Julius Baer Group said that it would limit its proposed rights offering to 500 million Swiss francs as part of its capital raise to fund its acquisition of Bank of America Corp.'s non-US wealth management unit.
European stocks fell modestly on Monday after Germany's Bundesbank reiterated its opposition to the European Central Bank's plan to purchase more government bonds, warning that the decision to share solvency risks should be taken by governments, and not by central banks.
The Euro Stoxx 50 index of eurozone bluechip stocks slid 0.2 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.4 percent, while the major averages around Europe fell between 0.1 percent and 0.5 percent.
U.S. stocks ended almost unchanged overnight, with a lack of fresh directional cues amid little major corporate and economic news contributing to the lackluster performance. The Dow dipped 3.56 points, the tech-heavy Nasdaq edged down 0.38 points and the S&P 500 inched down 0.03 points.
by RTT Staff Writer
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