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Stocks rise as investors seek US growth clues, oil rebounds

London - European stocks and US equity-index futures advanced as investors awaited a batch of economic data for clues on the strength of the world’s biggest economy and the trajectory of interest rates before next week’s Federal Reserve meeting.

The Stoxx Europe 600 Index halted a five-day losing streak, with heavyweight Siemens leading gains. Asia’s benchmark share gauge slid for a sixth session as traders awaited central bank meetings in the US and Japan. Oil rebounded but remained under $44 a barrel after a two-day slump.

The greenback pared gains to trade little changed against its major peers, and the pound was steady after the Bank of England left interest rates unchanged.

About $2trn has been wiped off the value of global equities over the past week as anxiety over the oil market coincided with signs major central banks were preparing to recalibrate monetary policy. While the odds of a US interest-rate hike on September 21 are 20%, the probability is 52% for a move this year.

Prospects may be swayed on Thursday as August data on industrial output, producer prices and retail sales are released. In the UK, policy makers also maintained the BOE’s asset-purchase target at £435bn.

Markets in mainland China, South Korea and Turkey are shut on Thursday for holidays.

"Markets are at the mercy of central banks but there’s a bit of a problem regarding credibility," said Thomas Thygesen, SEB AB’s head of cross-asset strategy in Copenhagen.

"Until we get a true picture of where global monetary policy is headed, markets can’t really pick a direction."

Stocks

The Stoxx Europe 600 Index added 0.2% at 12:09 in London. Siemens climbed 2.4% after chief executive officer Joe Kaeser said Europe’s biggest engineering company may beat its earnings forecast for the fiscal year ending this month.

Lenders rebounded after their worst three-day drop in two months, with those in Italy, Spain and Portugal leading the advance. The UK’s FTSE 100 Index gained 0.3% after the BOE decision.

Hennes & Mauritz declined 3% after the Swedish fashion retailer’s August sales missed estimates because of hot weather.

Next dropped 4.9% after warning that the current quarter will be its toughest this year and 2017 sales will be hurt by Brexit-induced price increases.

Electricite de France fell 1.1% after the UK government approved its plan to build two nuclear reactors for £18bn in southwest England.

Energy producers were among the worst performers in the index, with Eni SpA and Total weighing the heaviest, as oil traded below $44 a barrel.

Futures on the S&P 500 Index gained 0.3% after the underlying benchmark retreated 0.1% on Wednesday.

The MSCI Asia Pacific Index fell 0.3%. Japan’s Topix index lost ground for the seventh day in a row, led by declines in real-estate shares.

Hong Kong’s Hang Seng Index added 0.6%, trimming its weekly loss to 3.2% ahead of a holiday in the city on Friday.

A Bloomberg measure tracking Macau casino stocks jumped as much as 5.5% amid optimism Chinese Premier Li Keqiang will announce supportive policies during an October visit to the city.

Indonesian and Philippines shares also gained, with the exchange in Manila reversing losses in the final moments of trading to close up 2.2%. Indonesian shares gained the most in six weeks after the tax office said it collected 21.3trn rupiah ($1.6bn) in revenue from tax amnesty.

Currencies

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, added less than 0.1%. The New Zealand dollar led declines with a 0.2% drop, after second-quarter gross domestic product increased less than economists predicted.

Japan’s yen was little changed at 102.44 per dollar. Morgan Stanley said the Bank of Japan will probably cut the rate on some bank reserves to minus 0.2% from minus 0.1% at next week’s meeting. Kyodo News reported on Wednesday that such a move will be considered by the BOJ, while a Nikkei newspaper article said that the central bank was exploring a deeper foray into negative rates to stoke inflation.

The euro fell 0.1% to $1.1242 as a report confirmed that inflation stayed well below the European Central Bank’s goal last month, and as Governing Council member Klaas Knot said the institution’s quantitative easing program will be maintained until the end of 2020 as maturing debt is reinvested.

Britain’s pound was steady at $1.3234 as BOE policy makers indicated there’s still a chance of another rate cut this year as they assess the potential longer-term fallout from Britain’s decision to leave the European Union.

The currency erased an earlier drop as data showed retail sales fell in August less than economists predicted.

Commodities

Crude oil traded at $43.81 a barrel following a two-day slide of almost 6%. Libya and Nigeria, two OPEC members whose supplies have been crushed by domestic conflicts, are preparing to add hundreds of thousands of barrels to world markets within weeks. US data showed crude stockpiles fell 559 000 barrels last week, compared with a 4 million gain forecast in a Bloomberg survey.

"The market is getting a little more conservative about when the balance will return and prices are adjusting to that," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

"We have moderating demand combined with the possibility of increased supplies from Libya and Nigeria. There is also the potential for non-OPEC output to start increasing."

Copper held near its highest level in almost four weeks in London. It jumped 2.6% on Wednesday - the most in three months - after a report showed Chinese lending increased in August by more than economists estimated, brightening the outlook for demand in the world’s top user of industrial metals.

Copper producer KGHM Polska Miedz climbed 1.2%, boosting Polish shares. KGHM had fallen as much as 9.7% last week.

Bonds

The yield on US Treasuries due in a decade was little changed at 1.70 %, after falling three basis points the previous day. Thirty-year yields increased one basis point to 2.46%. The spread between the two securities reached the widest in more than six weeks on Wednesday.

Traders have been favouring shorter-dated notes, which tend to be influenced more by the prospect of policy changes from central banks, on confidence that the Fed will keep interest rates on hold, at least through next week’s policy meeting.
 
Securities with longer due dates have come under pressure after a selloff in Japan’s 30-year debt before next week’s BOJ meeting.

Yields rose across the euro area as Spain and France sold bonds. Germany’s benchmark 10-year bond yield increased three basis points to 0.043%.

Yields on similar-maturity French bonds also rose three basis points, to 0.35%, and Spain’s were one basis point lower at 1.06%.

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