European Stocks Little Changed Before Fed Policy DecisionJonathan Morgan
European stocks were little changed as investors awaited a Federal Reserve monetary-policy decision, while oil and gas companies advanced amid violence in Iraq.
Royal Dutch Shell Plc and BG Group Plc rose as a gauge of oil and gas companies increased on the Stoxx Europe 600 Index after the spreading conflict in Iraq pushed up oil prices. Daily Mail and General Trust Plc climbed 3.1 percent as its Zoopla Property Group Plc unit rose on its stock-market debut. Boliden AB gained 3.5 percent after Nordea Bank AB upgraded the copper and zinc producer. WPP Plc fell 2 percent, leading a gauge of media-related companies lower.
The Stoxx 600 Index fell 0.1 percent to 346.13 at the close of trading. Stocks rose yesterday after two days of declines amid turmoil in Iraq. The volume of shares traded in Stoxx 600 companies today was 15 percent lower than the 30-day average, according to data compiled by Bloomberg.
“European markets are cautiously optimistic ahead of the Fed announcement later,” Richard Hunter, head of equities at Hargreaves Lansdown Plc in London, wrote in an e-mail. “Details of further Fed tapering may well be announced, which would signal confidence in the recovering U.S. economy. Developed economies are moving in the right direction, notwithstanding the current geopolitical risks.”
The Federal Open Market Committee will reduce the pace of monthly asset purchases by $10 billion to $35 billion, according to the median of estimates compiled by Bloomberg News. Some 62 percent of 58 economists in a Bloomberg News survey predict the Fed will halt bond buying at its October meeting.
Officials led by Chair Janet Yellen will release a new set of quarterly forecasts for unemployment, inflation, economic growth and the benchmark federal funds rate when their meeting ends after the close of European markets today. In March, policy makers predicted their target rate, now close to zero, would be 1 percent at the end of 2015 and 2.25 percent a year later.
U.S. interest rates will rise faster than money-market rates indicate, economists surveyed by Bloomberg News June 12-16 predicted, with data yesterday showing inflation quickened in May by the most in more than a year.
Minutes of the Bank of England’s June 4-5 meeting, released today, showed policy makers believe a rate increase this year could be more likely than investors expect if the economy maintains its pace of growth, and labor-market slack -- the net proportion of people who are either unemployed or underemployed -- tightens faster than previously anticipated.
National benchmark indexes rose in 10 of the 18 markets in western Europe. Germany’s DAX added 0.1 percent, France’s CAC 40 slipped 0.1 percent, and the U.K.’s FTSE 100 gained 0.2 percent.
A gauge of oil and gas companies posted the second-biggest gain on the Stoxx 600 as Brent prices increased after fighting in Iraq damaged northern energy infrastructure, stoking fears of supply disruptions.
Shell, Europe’s biggest oil company, rose 1.5 percent to 2,407.5 pence. BG Group, the U.K.’s third-largest oil and gas producer, added 0.6 percent to 1,267 pence. Vestas Wind Systems A/S, the world’s biggest maker of wind turbines, climbed 4.8 percent to 278 kroner.
Daily Mail and General Trust gained 3.1 percent to 840 pence. Zoopla added 4.6 percent to 230 pence. Liberum Capital Ltd. said Daily Mail and General Trust’s decision to keep a majority stake in the owner of real estate websites Zoopla and PrimeLocation indicate it considers Zoopla undervalued amid a surging U.K. real-estate market. Rightmove Plc, which operates a website that lists properties across Britain, rose 1.4 percent to 2,200 pence.
Boliden climbed 3.5 percent to 95.25 kronor after Nordea upgraded the Swedish company’s shares to buy from sell, citing earnings growth from the second quarter that will exceed market expectations.
Rheinmetall AG advanced 2.1 percent to 51.99 euros. The German defense company will sign a 2.7 billion-euro ($3.7 billion) tank deal with Algeria, Handelsblatt reported, without citing anybody.
Bayerische Motoren Werke AG rose 0.7 percent to 91.41 euros, paring earlier gains of as much as 1.5 percent. The biggest maker of luxury vehicles plans to cut costs by 3 billion euros to 4 billion euros a year until 2020, Manager Magazin reported, citing unidentified people in the company.
Vodafone Group Plc added 1.5 percent to 198.1 pence after the Financial Times reported that the carrier and peer 02 are in talks to offer Amazon.com Inc.’s new smartphone to customers.
WPP, the world’s largest advertising company, fell 2 percent to 1,262 pence. A gauge of media-related companies was among the worst performers of the 19 industry groups on the Stoxx 600.