Global stocks mostly lower ahead of US data, speeches by Fed chairwoman

LONDON – European stock markets brushed aside earlier weakness in Asia to post solid gains Monday with traders increasingly confident that the European Central Bank will bolster its stimulus program later this week.

KEEPING SCORE: In Europe, Germany’s DAX was up 1 per cent at 11,402 while the CAC-40 in France rose 0.7 per cent to 4,962. The FTSE 100 index of leading British shares was 0.2 per cent higher at 6,387. Wall Street was poised for a solid open, with both Dow futures and the broader S&P 500 futures pointing to a 0.2 per cent advance at the bell.

ECB IN FOCUS: On Thursday, the ECB is widely expected to give the eurozone economy a further dose of stimulus as it tries to shore up the economic recovery and get inflation back towards its target of just under 2 per cent on an annual basis. Measures anticipated include extending the current 1.1 trillion-euro ($1.2 trillion) stimulus program and increasing the amount banks have to pay to keep money at the European Central Bank.

ANALYST TAKE: “Although not all members of the Governing Council are convinced of the need for additional action, they appear to be in the minority,” said Thomas Kobel, economist at SEB.

FED CONTRAST: While the ECB is expected to enact further stimulus, the U.S. Federal Reserve appears to be getting ready to lift its main interest rate in December amid strong jobs creation in the U.S. economy. That would be its first hike by the Fed since June, 2006. A raft of U.S. economic figures this week, culminating with Friday’s nonfarm payrolls report for November, could well cement market expectations for a hike.

CURRENCY IMPACT: The expected divergence in the monetary policies of the two central banks has weighed on the euro but bolstered the dollar. On Monday, the euro was down 0.1 per cent at $1.0582.

ASIA’S DAY: Seoul’s Kospi fell 1.8 per cent to 1,991.97 after South Korea’s industrial production in October dropped unexpectedly from the previous month, led by weakness in chemicals, auto production and construction. Tokyo’s Nikkei 225 retreated 0.7 per cent to 19,747.47. The Shanghai Composite Index advanced 0.3 per cent to 3,445.40, recovering a portion of Friday’s 5.5 per cent plunge. Sydney’s S&P/ASX 200 lost 0.7 per cent to 5,166.50 and Hong Kong’s Hang Seng shed 0.3 per cent to 21,996.42.

ENERGY: Benchmark U.S. crude rose 41 cents to $42.12 per barrel in electronic trading on the New York Mercantile Exchange, while Brent crude, which is used to price international oils, was up 46 cents at $45.32 per barrel in London.

CURRENCIES: The dollar gained to 122.93 yen from Friday’s 122.76. The euro edged down to $1.0586 from $1.0593.