World stock markets mostly rose on Wednesday amid hopes that the Federal Reserve would announce measures to stimulate the US economy.
Analysts say the US central bank could announce new bond-buying plans or signal that a plan is in the works at the end of its two-day meeting which ends later Wednesday. The Fed has already launched two rounds of bond purchases to lower long-term interest rates.
Another option is to extend Operation Twist, under which the Fed has been gradually selling short-term Treasury securities and using the proceeds to buy longer-term bonds to keep their rates down. The current program is set to expire at the end of the month.
Britain’s FTSE100 index was up 0.2 percent to 5,597.70 and Germany’s DAX was up 0.2 percent at 6,373.20. France’s CAC 40 was down 0.1 percent at 3,115.30.
After Asian indexes rose, Wall Street looked set to open mixed after booking big gains on Tuesday. Dow futures were down 0.2 percent while S&P 500 futures were up almost 0.1 percent.
“The market’s risk-averse sentiment is easing, and investors have quite high hopes for central bankers to help,” said Kwong Man Bun, chief operating officer at KGI Securities in Hong Kong. “Investors are now taking a breather before looking at the problem of Spain.”
Concerns over Spain, Greece and the euro limited any optimism over potential stimulus from the Fed.
Greek politicians continued to try to finalize a potential power-sharing deal to end weeks of political uncertainty there, while borrowing rates in Spain remained dangerously high despite a small drop on Wednesday. If they do not drop in coming weeks or months, Madrid is likely to have to ask for an international bailout to be able to finance itself.
Italian Premier Mario Monti has come out in favour of using the eurozone’s (euro) 440 billion ($555 billion) bailout fund to buy the sovereign debt of countries like Spain and Italy, which are implementing debt reduction measures but still suffering from high borrowing costs. Such a move would have the impact of lowering the borrowing rates.
Monti told a briefing at the close of the Group of 20 summit in Los Cabos, Mexico that using European Financial Stability Facility funds ‘‘was one of the topics of conversation” among leaders. Monti said the idea would be discussed further when he meets with the leaders of Germany, France and Spain in Rome on Friday, according to press agency LaPresse.
The leaders plan to come up with proposals for an EU summit the following week.
Meanwhile, Spain’s Finance Minister Cristobal Montoro denied that the country needs a full-fledged bailout of its public finances “because it does not need to be rescued.”
Spain has requested bailout money for its banks hurting from a property boom that went bust. Audits are due Thursday that will help Spain determine how much it needs from a (euro) 100 billion ($126 billion) lifeline to be set up by the 17-nation eurozone.
Earlier, Japan’s Nikkei 225 index closed up 1.1 percent to 8,752.30. Hong Kong’s Hang Seng added 0.5 percent to 19,518.85 and South Korea’s Kospi gained 0.7 percent to 1,904.12.
Australia’s S&P/ASX 200 added 0.2 percent to 4,132.40. Benchmarks in Singapore, Taiwan and Indonesia also ended higher. Mainland China’s Shanghai Composite Index fell. Benchmarks in Thailand and New Zealand were also lower.
Benchmark oil for July delivery was down 10 cents to $83.93 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose by 76 cents to end the day at $84.03 per barrel in New York on Tuesday.
In currencies, the euro rose slightly to $1.2692.