European Stocks Hold Steady as Euro Rebound Gives Traders Pause

What's Driving the Dollar Lower?

European stocks were little changed as a sharp drop in the U.S. dollar raised concerns that a rebound in the euro would weaken the region’s corporate earnings.

The Stoxx Europe 600 Index rose 0.1 percent at the close. The benchmark is up 1.2 percent in the new year, helped by expectations of an acceleration in economic growth and inflation. The euro climbed 1 percent, adding to a 0.8 percent increase Wednesday, after minutes from the Federal Reserve’s December meeting showed the central bank more concerned about a strong dollar potentially delaying higher interest rates than the market expected.

  • “Fed officials seem a lot less certain about the glide path of future projected rate rises,” Michael Hewson, chief market analyst at CMC Markets, wrote in note. “This may well explain why the U.S. dollar has sold off sharply.”
  • Persimmon Plc led U.K. homebuilders higher, jumping 7.2 percent after saying 2016 revenue rose on strong demand. The FTSE 250 Index gained 0.9 percent.
  • Citigroup equity strategist Robert Buckland remains cautious on European equities, writing in a note that political risks counter cheap valuation and improving economic momentum.
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