European Shares Slightly Higher Risk Aversion Present

European equities edged higher in early trade on Wednesday, extending gains from Tuesday after a batch of positive earnings and U.S. economic data briefly calmed worries over stretched valuations and the pace of economic recovery.

However, the prospect of more sanctions against Russia over the Ukraine crisis and a downed Malaysian airliner kept risk aversion on the table in the bond market, where German 10-year yields nudged down to 1.16 percent, just shy of record lows.

The euro also hit an eight-month low against the dollar on concerns that tougher Russian penalties might hit fragile euro zone growth.

The pan-European FTSEurofirst 300 share index was 0.3 percent higher at 0742 GMT, buoyed by better-than-expected earnings from German automaker Daimler and Dutch paint-and-chemicals firm AkzoNobel.

Gains were more muted in Europe – where the pace of economic recovery and the impact of a Russia slowdown have worried investors – than in much of Asia or the United States, where stocks hit fresh milestones and where earnings from bellwethers such as Apple Inc and Verizon topped forecasts.

“Geopolitical tensions are preventing a better market development in Europe,” said Christian Stocker, equity strategist at UniCredit.

“Markets will be dominated by consolidation moves due to the uncertainty, combined with high valuations.”

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza