LONDON—European stocks shuffled higher Thursday, stabilizing along with the euro after heavy losses in the previous session, while Spanish and Italian bond yields eased off recent highs.
The benchmark Stoxx Europe 600 Index was recently up 0.3% at 241.17. However, regional indexes were already starting to come off opening highs.
The U.K.'s FTSE 100 Index was up 0.7% at 5331.88, while Germany's DAX and France's CAC 40 Index were up 0.3% at 6299.26 and 3025.89, respectively.
In the periphery, Greece's ASE index was 0.2% higher at 512.18, Italy's FTSE MIB was up 0.5% at 12935.60 and Spain's benchmark IBEX-35 was 0.8% higher at 6141.80.
Bond markets were relatively calm. The yield on Spain's 10-year government bond was down 0.03 percentage point at 6.62%, while the corresponding Italian yield was down 0.05 percentage point at 6.01%.
The June bund contract was down 23 ticks at 145.10. Labor market data out of Germany helped to underpin the tone. Germany's seasonally adjusted jobless rate fell to a record low in May, underlining the country's resilience to the euro-zone debt crisis.
The unemployment rate fell to 6.7%, the lowest since comparable records began in 1998, from 6.8% in April, and compared with expectations for it to remain at 6.8%.
Still, stocks were choppy and the move higher in equities appeared to lack any real conviction, set against a backdrop of mounting concerns about Spain's banking system and the possibility of a Greek exit from the euro zone."
As we round off the worst monthly performance since last August, equities are marginally higher this morning. However, in the absence of decisive action to stem the rot in the euro zone, sellers should reconvene soon enough," said Mike McCudden, head of derivatives at Interactive Investor.
"Spain will likely be seeking euro-zone bailout funds in the near future," added Mr. McCudden. Market participants were also skeptical about the various measures put forward by the European Commission on Wednesday, such as the creation of a banking union and the direct recapitalization of banks through the permanent European Stability Mechanism.
They pointed out that no clear road map has been set out. At the same time, without Germany's backing, any plans are unlikely to go ahead.
"While talks of joint debt issuance or using the European Financial Stability Facility/ European Stability Mechanism for direct bank recapitalization are ripe, Germany and Finland continue to stand against it and unless we see any shift in stance from these heavyweights, any risk-on move from such headlines will likely remain short-lived," said Lloyds Bank Corporate Markets.
As Europe's "periphery" continues to dominate headlines, attention will turn to Ireland, which holds its referendum on the EU Fiscal Compact treaty. The Irish are expected to vote in favor of the treaty and the final outcome of the vote is due Friday.
Lloyds Bank Corporate Markets noted that Ireland's current rescue program lasts until the fourth quarter of 2013, and the country aims to return to the bond market later this year. "The ratification of the fiscal compact will help provide a backstop to the country, in turn making it easier for them to access the market directly," it said.
In corporate news, London midcap technology company Logica surged 64% following a 105p per share takeover offer from Canadian IT services provider CGI Group. Merchant Securities said the deal is good for Logica shareholders, given the long-term structural challenges the group faces with high European public sector exposure, particularly in the U.K.
Still, it said the timing of the bid looks somewhat opportunistic, given that Logica's price-to-earnings ratio is currently below the dividend yield. Elsewhere, Telefónica was up 2.6% after saying it is studying the possible listing of its German unit and stock offerings of some of its Latin American businesses as part of a strategy to cut its debt.
An upgrade to equalweight from underweight by Morgan Stanley also helped to prop the shares up. The flash estimate of euro-zone inflation is expected at 9 a.m. GMT.
In the U.S., the ADP employment report is at 8:15 a.m. ET, initial jobless claims and the second release of first-quarter gross domestic product data are at 8:30 a.m. ET, and the Chicago purchasing managers' index is at 9:45 a.m. ET.
The euro was recovering against the dollar and by 8:10 a.m. GMT was trading at $1.2405, from $1.2366 late Wednesday in New York.
The dollar was at ¥78.85 from ¥79.07. Among commodities, spot gold was flat at $1,565.00 a troy ounce, while July Nymex crude oil futures were up 24 cents at $88.06 a barrel and July Brent futures were up 40 cents at $103.87.
wsj.com
The benchmark Stoxx Europe 600 Index was recently up 0.3% at 241.17. However, regional indexes were already starting to come off opening highs.
The U.K.'s FTSE 100 Index was up 0.7% at 5331.88, while Germany's DAX and France's CAC 40 Index were up 0.3% at 6299.26 and 3025.89, respectively.
In the periphery, Greece's ASE index was 0.2% higher at 512.18, Italy's FTSE MIB was up 0.5% at 12935.60 and Spain's benchmark IBEX-35 was 0.8% higher at 6141.80.
Bond markets were relatively calm. The yield on Spain's 10-year government bond was down 0.03 percentage point at 6.62%, while the corresponding Italian yield was down 0.05 percentage point at 6.01%.
The June bund contract was down 23 ticks at 145.10. Labor market data out of Germany helped to underpin the tone. Germany's seasonally adjusted jobless rate fell to a record low in May, underlining the country's resilience to the euro-zone debt crisis.
The unemployment rate fell to 6.7%, the lowest since comparable records began in 1998, from 6.8% in April, and compared with expectations for it to remain at 6.8%.
Still, stocks were choppy and the move higher in equities appeared to lack any real conviction, set against a backdrop of mounting concerns about Spain's banking system and the possibility of a Greek exit from the euro zone."
As we round off the worst monthly performance since last August, equities are marginally higher this morning. However, in the absence of decisive action to stem the rot in the euro zone, sellers should reconvene soon enough," said Mike McCudden, head of derivatives at Interactive Investor.
"Spain will likely be seeking euro-zone bailout funds in the near future," added Mr. McCudden. Market participants were also skeptical about the various measures put forward by the European Commission on Wednesday, such as the creation of a banking union and the direct recapitalization of banks through the permanent European Stability Mechanism.
They pointed out that no clear road map has been set out. At the same time, without Germany's backing, any plans are unlikely to go ahead.
"While talks of joint debt issuance or using the European Financial Stability Facility/ European Stability Mechanism for direct bank recapitalization are ripe, Germany and Finland continue to stand against it and unless we see any shift in stance from these heavyweights, any risk-on move from such headlines will likely remain short-lived," said Lloyds Bank Corporate Markets.
As Europe's "periphery" continues to dominate headlines, attention will turn to Ireland, which holds its referendum on the EU Fiscal Compact treaty. The Irish are expected to vote in favor of the treaty and the final outcome of the vote is due Friday.
Lloyds Bank Corporate Markets noted that Ireland's current rescue program lasts until the fourth quarter of 2013, and the country aims to return to the bond market later this year. "The ratification of the fiscal compact will help provide a backstop to the country, in turn making it easier for them to access the market directly," it said.
In corporate news, London midcap technology company Logica surged 64% following a 105p per share takeover offer from Canadian IT services provider CGI Group. Merchant Securities said the deal is good for Logica shareholders, given the long-term structural challenges the group faces with high European public sector exposure, particularly in the U.K.
Still, it said the timing of the bid looks somewhat opportunistic, given that Logica's price-to-earnings ratio is currently below the dividend yield. Elsewhere, Telefónica was up 2.6% after saying it is studying the possible listing of its German unit and stock offerings of some of its Latin American businesses as part of a strategy to cut its debt.
An upgrade to equalweight from underweight by Morgan Stanley also helped to prop the shares up. The flash estimate of euro-zone inflation is expected at 9 a.m. GMT.
In the U.S., the ADP employment report is at 8:15 a.m. ET, initial jobless claims and the second release of first-quarter gross domestic product data are at 8:30 a.m. ET, and the Chicago purchasing managers' index is at 9:45 a.m. ET.
The euro was recovering against the dollar and by 8:10 a.m. GMT was trading at $1.2405, from $1.2366 late Wednesday in New York.
The dollar was at ¥78.85 from ¥79.07. Among commodities, spot gold was flat at $1,565.00 a troy ounce, while July Nymex crude oil futures were up 24 cents at $88.06 a barrel and July Brent futures were up 40 cents at $103.87.
wsj.com
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