By Josie Cox
Some upbeat corporate earnings Wednesday helped European markets
shrug off lackluster economic figures out of Asia as well as fears
that the crisis in Ukraine could knock the European recovery off
track.
Shares in E.ON SE rose 4.5% to the top of the pan-European index
after earnings, boosting the Stoxx Europe 600 and the DAX index,
which had enduring a beating in the previous session following weak
investor confidence figures.
On Tuesday, that had sent the DAX down 1.2% and the euro close
to a nine-month low, but some investors appeared to recognize this
as an attractive entry point Wednesday.
In early trade, the DAX had added 0.8%, supported by a bid for
E.ON peer RWE's AG shares, as well as a rise in names such as
HeidelbergCement AG, Deutsche Telekom AG and Commerzbank AG. The
euro was broadly unchanged against the U.S. dollar at $1.3371 and
0.1% lower against the British pound at GBP0.7946.
Later in the session, investors will turn their attention to
euro-zone industrial production figures for June and U.K. labor
market numbers, as well as the latest inflation report from the
Bank of England.
HSBC strategists wrote in a note that they expect the BOE to cut
its wage-growth forecasts but also to lower its unemployment
profile.
"Higher employment should mitigate some of the negative impact
of lower incomes on spending growth, meaning we expect only small
changes to growth and inflation," HSBC wrote.
"If the inflation profile is moved down further, this would
signal a relatively dovish [monetary policy committee]. On the
other hand, a message that slack had been eroded faster than
expected would indicate a more hawkish stance," they added
Overnight, data showed that Japan's economy contracted sharply
in the second quarter after a sales-tax increase in April caused
household spending to tumble. This, economists said, could pressure
the government to take additional stimulus measures.
The figures, however, showed little impact on currency markets
Wednesday, with Japan's yen trading a little weaker on the day at
Y102.31 against the dollar.
Elsewhere in currency markets, the ruble recorded marginal
losses against the dollar, to trade at 36.22.
In commodity markets, gold was steady at $1,310.50 a troy ounce.
Brent crude lost 0.4% to be at $103.48 a barrel.
Write to Josie Cox at josie.cox@wsj.com