WASHINGTON — European shares edged lower and the dollar slipped against most major currencies yesterday after the United States Federal Reserve announced new measures to support the world’s largest economy.
Report by Reuters
Oil, copper and gold also fell as investors remained worried about whether the US would miss a year-end deadline to avert a “fiscal cliff” of about $600 billion of tax hikes and spending cuts that will start in January.
The Fed said it would buy $45 billion of Treasuries a month on top of the $40 billion a month in mortgage-backed bonds it started buying in September.
It also took the unprecedented step of indicating that interest rates would remain near zero until unemployment falls to at least 6,5% so long as inflation was contained.
After the decision MSCI’s world equities index MIWD00000PUS extended its recent gains by 0,15% to 338,27 points helped by a broad rally across Asian markets, as investors welcomed the setting of clearer targets for inflation and jobs.
But European share markets were less impressed, having enjoyed a three-week rally that has sent prices to 18-month highs. The FTSE Eurofirst 300 index FTEU3 was down 0,3% in early trading at 1 135,65 points. “I think we’ll get a slow drift into the year-end . . . There are no real factors that are going to come in to send it significantly higher. The overhang of the fiscal cliff is going to weigh on the upside to a certain extent,” said Michael Hewson, senior analyst at CMC Markets. In the foreign exchange markets, the dollar slipped to a one-week low of 79,711 against a basket of major currencies DXY after the Fed decision, sending the euro to a one-week high of $13 098. — Reuters
