European shares edge cautiously higher; focus on Fed

With the Fed not expected to cut the pace of bond purchase some investors felt the recent global equity sell-off had been overdone

 

 European equities edged higher on Wednesday, with volatility expected to be high and volumes light as investors look to the US Federal Reserve for clues on how soon it may start to scale back its stimulus programme.

 

With the Fed not expected to cut the pace of bond purchases at the meeting which ends late on Wednesday, some investors felt the recent global equity sell-off had been overdone, and cautiously bought back into the market.

 

Others, however, preferred to sit on the sidelines to see exactly what the US central bank says about the possibility of future reduction in the stimulus which has helped to keep stock markets afloat through months of lacklustre economic health.

 

The FTSEurofirst 300 was up 0.2 % at 1,185.52 points by 0703 GMT, still holding some 5.6 % below the 5-year highs scaled last month before concerns about the end of ample global stimulus sent markets into a tailspin.

 

"We have seen this come-down for 3-1/2 weeks - a normal consolidation after the brilliant bull market in the four weeks before - and it seems to be concluded," said Achim Matzke. Strategist at Commerzbank.

 

"There is more opinion in the market that there will be no switch in the (Fed) policies and consequently the market goes a little bit better ... If they give indications for a switch in their policies, then it's not surprising if the consolidation continues, but all in all it looks like the market is on stable ground and perhaps has a chance to go a little bit higher."