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European stocks rise as pound wins brief boost

 

European stock markets rose solidly Wednesday, while the pound briefly won support from well-received UK employment data, as investors looked ahead to the release of Federal Reserve minutes for clues on the US interest rate outlook.

"Sterling reversed losses after rallying firmly on stronger-than-expected unemployment and earnings data," said Neil Wilson, senior market analyst at ETX Capital trading group.

Britain's unemployment rate has struck a new 42-year low, official data showed Wednesday, as the uncertainty of Brexit boosts temporary hirings and sent the number of people in jobs to a record high.

The unemployment rate dipped to 4.4 percent in the three months to June to record the lowest level since 1975, the Office for National Statistics (ONS) said in a statement. It had stood at 4.5 percent in the quarter to May.

The data lifted the pound from a one-month low to briefly trade higher than $1.29 before sliding back.

Wall Street stocks opened higher, with the Dow gaining 0.2 percent.

Minutes due to be released later Wednesday from the latest US Federal Reserve meeting will be scrutinised by the market.

"Investors will be analysing the minutes from the July 25-26 FOMC meeting closely this afternoon, looking for clues as to when the Fed might begin reducing its massive balance sheet," said analysts at Briefing.com

"In addition, any language surrounding inflation will be of interest as its stubbornness to pick up may force the US central bank to settle for just two rate hikes this year instead of the three that it had originally planned for," they added.

Elsewhere, calm returned to Asian stock markets, with equities stabilising after a two-day rally, as the dollar strengthened on upbeat US economic data.

Volatility eased as traders focused on the world economy and corporate earnings after a week dominated by the dramatic spike in tensions over North Korea, which triggered a global sell-off before prices bounced back Monday.

The Nikkei, which made strong gains Tuesday after finishing at its lowest level for more than three months the previous day, ended marginally down in light trade, even as the weakening yen boosted exporters.

"Volatility declined on international markets ... with US stock markets returning to their moribund state" on Tuesday said Ric Spooner, an analyst at CMC Markets (LSE: CMCX.L - news) in Sydney.

"This has provided a neutral lead for the local market where the main focus will be on the profit reporting season."

On commodities markets, oil prices rose after an industry report indicated stronger demand in the US.

American Petroleum Institute (API (Stuttgart: 565969.SG - news) ) said US commercial crude stockpiles declined by 9.2 million barrels last week, ahead of US Energy Information Administration data later Wednesday which could further buoy prices.

However, lingering concerns remained about oversupply, with US shale oil production expected to remain robust and doubts over compliance with OPEC-led output cuts.

- Key figures around 1330 GMT -

London - FTSE 100: UP 0.8 percent at 7,439.68 points

Frankfurt - DAX 30: UP 0.8 percent at 12,279.75

Paris - CAC 40: UP 1.0 percent at 5,193.86

EURO STOXX 50: UP 0.9 percent at 3,492.93

New York - Dow: UP 0.2 percent at 22,038.92

Tokyo - Nikkei 225: DOWN 0.1 percent at 19,729.28 (close)

Hong Kong - Hang Seng: UP 0.9 percent at 27,409.07 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,246.45 (close)

Euro/dollar: DOWN at $1.1694 from $1.1734 at 2100 GMT Tuesday

Pound/dollar: DOWN at $1.2855 from $1.2870

Dollar/yen: UP at 110.86 yen from 110.70 yen

Oil - Brent North Sea: UP 30 cents at $51.10 per barrel

Oil - West Texas Intermediate: UP 15 cents at $47.70

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