Draghi surprises Europe, dollar rises – Reuters


NEW YORK U.S. shares rose modestly and European stocks were little changed on Thursday as investors digested testimony from former FBI Director James Comey before a Senate panel, while the euro fell after the European Central Bank kept interest rates on hold and oil prices briefly touched one-month lows.

Comey told U.S. lawmakers in the congressional hearing he had no doubt that Russia had interfered with the election but was confident that no votes had been altered.

Investors also await the outcome of the general election in Britain as voting began on Thursday in a snap vote predicted to give Prime Minister Theresa May a larger parliamentary majority.

The FTSEurofirst 300 of top European equities briefly hit a three-week low of 1,526.29 after the ECB said subdued inflation meant it would continue to pump more stimulus into the region’s economy. It still judged the euro zone economy to be rebounding and signaled it would not cut interest rates further.

“Comey might move the markets in the short term but I don’t think it’s going to affect the intrinsic values of what many large U.S. businesses are worth,” said Mike Mattioli, portfolio manager at Manulife Asset Management in Boston.

MSCI’s all-country world equity index .MIWD00000PUS was last down 0.33 points, or 0.07 percent, at 467.3.

The Dow Jones Industrial Average .DJI was last up 66.28 points, or 0.31 percent, at 21,239.97. The S&P 500 .SPX was up 3.87 points, or 0.16 percent, at 2,437.01. The Nasdaq Composite .IXIC was up 15.12 points, or 0.24 percent, at 6,312.50.

Europe’s broad FTSEurofirst 300 index .FTEU3 closed down 0.04 percent at 1,528.71.

ECB DECISION

The euro hit its lowest since May 31 against the U.S. dollar of $1.1196 EUR= after the ECB announcement. The dollar index, which measures the greenback against a basket of six major rivals, was last up 0.3 percent at 97.016.

“Even though (the ECB decision) was well telegraphed over the last 24 hours, the future expectations on inflation came in a bit lower than the market had been anticipating,” said Dean Popplewell, chief currency strategist at Oanda in Toronto. “That sort of weighed on the euro.”

Sterling fell 0.2 percent against the dollar to $1.2936 GBP=D4 ahead of the British election outcome.

Oil prices rebounded after benchmark Brent crude and U.S. crude prices hit one-month lows of $47.56 and $45.20, respectively.

Those troughs were hit after an unexpected surge in U.S. inventories and the return of more Nigerian crude aggravated concerns about a worldwide glut.

Brent crude LCOc1 was last up 2 cents, or 0.04 percent, at $48.08 a barrel. U.S. crude CLc1 was last up 12 cents, or 0.26 percent, at $45.84 per barrel.

U.S. Treasury yields edged higher after the ECB’s upgrade of its euro zone growth forecast, with benchmark 10-year yields US10YT=RR last at 2.201 percent compared to 2.180 percent late Wednesday.

The dollar’s gains pushed gold prices lower. Spot gold prices XAU= were last down 0.72 percent at $1,277.13 an ounce. [nL3N1J538R]

(Additional reporting by Marc Jones in London, Saqib Iqbal Ahmed and Gertrude Chavez-Dreyfuss in New York; Editing by Bernadette Baum)

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