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European Shares Set For Cautious Open

stockmarkets jan18 31mar21 lt

European stocks are likely to open on a cautious note Wednesday as investors keep a wary eye on the yields and U.S. President Biden's infrastructure spending plans.

The yield on the 10-year Treasury rose to 1.73 percent after a report showed U.S. consumers are even more confident than economists expected.

The dollar hit a fresh one-year high versus the yen and reached multi-month peaks against other rivals as investors await more details on the next leg of U.S. stimulus to overhaul U.S. infrastructure and manufacturing.

Gold edged lower on dollar strength while oil inched up after falling overnight as the Suez Canal reopened to traffic.

Asian markets are trading mixed despite upbeat data from China. Official data showed that China's manufacturing activity expanded at the fastest pace in three months in March, adding further momentum to a solid economic recovery.

The official manufacturing Purchasing Manager's Index (PMI) rose to 51.9 from 50.6 in February. Growth in China's services sector also picked up significantly in March, a separate survey showed.

U.K. shop prices continued to fall in March as non-food retailers resorted to discounting, data from the British Retail Consortium showed earlier in the day.

The shop price index fell 2.4 percent on a yearly basis in March. Non-food prices were down 4 percent from last year, while food prices gained 0.3 percent.

Unemployment figures from Germany and flash consumer price data from euro area are due later in the session, headlining a busy day for the European economic news.

Across the Atlantic, trading may be impacted by reaction to a report on private sector employment.

U.S. stocks ended slightly lower overnight as treasury yields hit a new 14-month high and investors awaited details on Biden's infrastructure plan.

A measure of U.S. consumer confidence raced in March to its highest level since the start of the Covid-19 pandemic, reinforcing investor optimism about the economy.

The Dow and the S&P 500 slid around 0.3 percent while the tech-heavy Nasdaq Composite index edged down 0.1 percent.

European markets closed higher on Tuesday on the back of encouraging economic data from the region and dovish comments by Bank of England's policy maker Gertjan Vlieghe.

The pan European Stoxx 600 gained 0.7 percent. The German DAX climbed 1.3 percent to a record high, France's CAC 40 index rallied 1.2 percent and the U.K.'s FTSE 100 added half a percent.

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