EUROPE’S major stock markets rose on Wednesday before a crucial EU Brexit summit and a European Central Bank interest rate decision.
Investors were nervous about the possibility of a US-EU trade war after Washington’s tariffs threat, while markets are awaiting minutes from the US Federal Reserve’s (Fed’s) latest policy meeting.
In late morning deals, London’s benchmark FTSE 100 index advanced 0.2 per cent as investors waited to see whether EU leaders will grant another Brexit extension.
The British pound – a key barometer of the long-runing Brexit saga – held steady, shrugging off news that the UK economy grew by just 0.2 per cent in February from a month earlier.
‘Anything but boring’
“Today is the day we have all been waiting for – the reason why markets have been so subdued at the start of the week,” said Oanda analyst Craig Erlam.
“An emergency EU Brexit summit, ECB meeting and Fed minutes will ensure this is anything but a boring day in the markets.”
In the eurozone, Frankfurt and Paris stocks also gained ground as official data showed a 0.4 per cent rise in French industrial output in February.
“Eurozone equity markets are a little higher today as traders look ahead to the ECB,” added CMC Markets analyst David Madden.
“Monetary policy is tipped to remain on hold, but policymakers might adopt more dovish language in light of the soft economic indicators released from the euro-area recently.”
Yet the ECB rate call – due at 11:45am GMT (6:45pm in Cambodia) – will likely be eclipsed by news from Brussels.
European leaders are gathered for a summit showdown to decide how long a Brexit delay to grant British Prime Minister Theresa May – and under what conditions.
Without a postponement, Britain is due to crash out of the EU at midnight on Friday under a “no-deal” Brexit that could trigger economic chaos.
May has embarked on a last-ditch battle to postpone Brexit from April 12 to June 30 to arrange an orderly departure – but European leaders are expected to offer her a longer delay of up to a year.
“All eyes are on the EU27 meeting which has the potential to force the UK to choose between no-deal or no-Brexit,” noted IG analyst Joshua Mahony.
“Meanwhile, US trade wars are back on the agenda,” he added.
European and US equities had fallen on Tuesday amid a flare-up in trade tensions between Washington and Brussels.