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European stocks rise on economic recovery hopes

·3-min read
Investors expect months of pent-up spending to end in many major economies later this year

Hopes for an economic recovery helped push European stock markets higher Tuesday, while trading was mixed in New York with attention focused on the Federal Reserve's much-anticipated policy meeting this week.

News that several European countries had suspended use of the AstraZeneca vaccine owing to safety concerns appeared to have little impact on continental sentiment.

The EU's medicines regulator said Tuesday it was "firmly convinced" the benefits of AstraZeneca's jab outweigh potential risks.

Elsewhere, the dollar was mixed against its main rivals and oil prices slid on profit-taking after recent strong gains.

The US tech market Nasdaq was 0.6-percent higher in midday trading, while main Asian markets closed higher earlier in the day.

On the corporate front, shares in Nokia were up by less than 0.1 percent after the Finnish telecoms equipment maker said it will slash up to 11 percent of its workforce within two years.

The firm is looking to cut costs and focus on a few key areas in the face of tough competition over super-fast 5G networks.

- Fed on inflation -

The Fed's two-day policy meeting beginning Tuesday is front and centre of investors' minds as they look for its response to the rally in US bond yields that has rattled trading floors.

However, the general consensus is that policymakers will maintain their vast bond-buying scheme and keep rates at record lows until 2023.

"The Fed will probably use the excuse of unemployment being too high to keep current policies intact for a while yet to let the economy heat up further," suggested Fawad Razaqzada, a market analyst at ThinkMarkets.

Fed boss Jerome Powell "will rely on the short-term risks to the outlook to defend his ultra-easy monetary stance", OANDA's Edward Moya agreed.

"The summertime is when inflation could rear its ugly head, so Powell should be able to push back any concerns until then," he added.

Expectations for a surge in activity later this year, backed by huge government rescue packages and central bank largesse, have helped power world markets to record or multi-year highs.

However, the recovery has investors concerned about inflation that could force national banks to wind down the ultra-loose monetary policies that have helped send equities higher.

US benchmark 10-year Treasury yields -- a guide to future interest rates -- have reached a one-year high in recent weeks.

But as the US vaccine programme kicks on and Americans begin to get government cash handouts as part of President Joe Biden's mega-stimulus, investors are also betting that months of pent-up spending will soon end in the world's top economy, a key driver of global growth.

Government data released before US markets opened showed retail sales plunging 3.0 percent and industrial production falling 2.2 percent, in what analysts viewed not as a warning sign for the wider economy but merely the result of harsh winter weather.

- Key figures around 1700 GMT -

EURO STOXX 50: UP 0. percent at 3,850.96 points

New York - Dow: DOWN 0.4 percent at 32,835.44

London - FTSE 100: UP 0.8 percent at 6,803.61 (close)

Frankfurt - DAX 30: UP 0.7 percent at 14,557.58 (close)

Paris - CAC 40: UP 0.3 percent at 6,055.43 (close)

Tokyo - Nikkei 225: UP 0.5 percent at 29,921.09 (close)

Hong Kong - Hang Seng: UP 0.7 percent at 29,027.69 (close)

Shanghai - Composite: UP 0.8 percent at 3,446.73 (close)

Euro/dollar: DOWN at $1.1905 from $1.1929 at 2035 GMT

Pound/dollar: UP at $1.3901 from $1.3897

Euro/pound: DOWN at 85.62 pence from 85.93 pence

Dollar/yen: DOWN at 108.94 yen from 109.13 yen

West Texas Intermediate: DOWN 1.1 percent at $64.69 per barrel

Brent North Sea crude: DOWN 0.8 percent at $68.33 per barrel