Europe stock markets fall; euro holds gains

The euro held its gains yesterday as traders bet that the European Central Bank would start to wind down its crisis-era stimulus programme, while lower expectations for further tightening in the United States weighed on the dollar.
While ECB boss Mario Draghi made no mention of the bank’s plans for its bond-buying scheme in a much-anticipated speech Friday, analysts said his optimism about the eurozone economy was enough to fuel euro buying.
“Draghi provided investors an opportunity to keep adding to long positions,” said market strategist Hussein Sayed of online foreign exchange brokerage FXTM.
Janet Yellen’s decision not to discuss the Federal Reserve’s plans for future interest rate rises was also seen as an indication of the US central bank’s reticence to announce any more increases.
The single currency rose as high as $1.1973, around its highest since January 2015, while it was also around eight-year highs against the pound. The dollar continued to struggle against the yen.
While the ECB is widely expected soon to begin tapering its stimulus, its policymakers are concerned about the impact of a strong currency on the bloc’s exports.
“Mario Draghi will be tearing his hair out,” said Greg McKenna, chief market strategist at AxiTrader.
“If saying nothing can drive the euro to its highest level since January 2015 then the ECB president and his colleagues will be genuinely worried about the impact an announcement to further reduce its QE programme could have on the single currency.”
On equity markets Hong Kong extended its winning run into a fifth straight day, although early gains were pared on profit-taking.
But Hong Kong-listed shares in Wanda Hotel Development Co plunged almost 10% at one point even though the firm denied reports that chairman Wang Jianlin had been barred from leaving China and detained for hours. It trimmed some of the losses but still ended down more than 8%.
Shanghai added 0.9% but Tokyo ended flat, Sydney shed 0.6% and Seoul was off 0.4%.
In European trade, Paris and Frankfurt stocks were weighed down by the strength of the euro. In Paris, CAC 40 was down 0.5% at 5,079.75 points, Frankfurt’s DAX 30 lost 0.4% to 12,123.47 and London was closed for a holiday yesterday.
Wall Street was mixed approaching midday, with the Dow dipping 0.1%.
Shares in Kite Pharma, which could soon have cell therapies to treat some cancers on the market, soared more than 28% after it agreed to be bought out by Gilead Sciences.
The main US oil contract West Texas Intermediate tumbled after surging at the end of last week, as energy companies were forced to shut down some of their operations because of deadly Hurricane Harvey.
“Oil prices are reacting differently to the considerable disruptions to US oil production and crude oil processing caused by Hurricane Harvey,” said analysts at Commerzbank.
While US petrol prices hit a two-year high, crude prices have fallen. 
Commerzbank analysts said that while oil production in the region has been shut down, demand for crude has also been lowered as the refineries have been closed and shipping has also been disrupted.
Shares in US oil majors Chevron and ExxonMobil were both down 0.4% approaching midday.

Traders at the Frankfurt Stock Exchange. The DAX 30 lost 0.4% to 12,123.47 points yesterday.

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