Deutsche lifts Stocks before Yellen, Draghi

A rise in Deutsche Bank shares helped push European stocks higher on Wednesday, easing concerns over Germany’s financial sector that had hit equities in Asia and drove investors into safe-haven government bonds and the dollar.

Beyond banking sector worries, investors were looking ahead to U.S. Federal Reserve Chair Janet Yellen’s appearance before a Congressional committee, a speech by European Central Bank President Mario Draghi and a meeting of oil producers in Algiers

Deutsche, Germany’s biggest lender, faces big fines over claims it mis-sold mortgage-backed securities and, like other euro zone lenders, has been squeezed by the European Central Bank’s low interest rates. Its shares, which hit record lows on Tuesday have fallen some 50 percent this year (DBKGn.DE).

However, the stock rose more than 3 percent in early deals, helping push the pan-European STOXX 600 index up 1.2 percent, led by banks .SX7P.

Analysts said sentiment towards riskier assets was also improved by data on Tuesday showing U.S. consumer confidence this month hit its highest since 2007.

For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=

German two-year government bonds DE2YT=TWEB, however, held near Tuesday’s record low of minus 0.711 percent. Before an auction of the bonds due later on Wednesday, they yielded minus 0.702 percent, flat on the day.

Asian shares spent much of the trading session in negative territory, on investor concern about the state of the European banking sector and lower oil prices.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS moved in and out of negative territory and last stood less than 0.1 percent higher on the day.

Japanese shares fell, with the Nikkei 225 index .N225 falling 1.3 percent by the close.

Oil prices were slightly higher, partially reversing Tuesday’s fall of some 3 percent on diminished expectations that oil producers meeting in Algiers this week would reach an agreement to ease a global glut of crude.

Members of the Organization of the Petroleum Exporting Countries (OPEC) are due to meet at 1400 GMT. Some in the market say the Algiers talks could lay the groundwork for an agreement at OPEC’s formal policy meeting in Vienna on Nov. 30, said Vyanne Lai, oil analyst at National Australia Bank in Melbourne.

“I think OPEC producers realize they can’t continue to expand production indefinitely – OPEC producers are close to maximum capacity – so there could be room for a deal (in November),” Lai said.

Brent crude LCOc1, the international benchmark, last traded at $46.08 a barrel, up 11 cents on the day on data showing a surprise drawdown in U.S. inventories.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell