- Fed policy decision looms
- BoE meeting minutes released
- Iraq asks US to launch air strikes
FTSE 100: 0.17%
FTSE MIB: 0.15%
IBEX 35: 0.49%
Stoxx 600: -0.08%
European stocks were mixed before the US Federal Reserve's policy decision.
The Fed is forecast to announce a further tapering of quantitative easing when it wraps up its policy meeting later this evening. Analysts predict the central bank will cut another $10bn off its monthly bond purchase programme to take the total to $35bn.
However, following Tuesday's release of the latest US inflation data, which showed prices rose more than forecast, some analysts now believe the Fed may consider raising interest rates sooner than it had been expecting. US consumer prices rose by 0.4% month-on-month and 2.1% year-on-year in May, surpassing analysts' estimates.
"Yesterday's US CPI numbers has invited some concern that, even here, tightening might come sooner rather than later, which would be more plausible given that CPI inflation is over 2%, and unemployment is continuing to fall," according to Michael Hewson at CMC Markets.
In March, policy makers estimated that the interest rate, now close to zero, would rise to 1% at the end of 2015 and to 2.25% a year later.
Meanwhile, Fed Chair Janet Yellen will also today release a new set of quarterly predictions for unemployment, inflation, economic growth and the benchmark federal funds rate.
BoE meeting minutes
Bank of England policymakers voted unanimously to hold interest rates this month, but expressed surprise that markets had underestimated the chance of a hike later this year.
Members of the Bank's Monetary Policy Committee all voted to keep base rates at 0.5% and to leave quantitative easing unchanged at £375bn, minutes of the meeting on June 4th-5th showed.
In his Mansion House speech last week, BoE Governor Mark Carney suggested that an increase in interest rates was a possibility as soon this year given the pick-up in the economy.
"Minutes from the Bank of England struck an odd tone, neither entirely backing up Mark Carney nor completely distancing themselves from his Mansion House speech," IG analyst Chris Beauchamp noted.
"The bank might think the market has become too relaxed about a rate hike in 2014, but on the back of today's minutes most policymakers are still worried that growth is too weak. To raise rates only to cut them again would be the height of folly, even without considering the deleterious impact on the bank's reputation."
Iraq asks US to launch air strikes
Iraq has urged the US to launch air strikes against rebel insurgents who have seized several cities.
"We have a request from the Iraqi government for air power," confirmed top US military commander Gen Martin Dempsey.
The news came after jihadist militants launched an attack on Iraq's biggest oil refinery north of Baghdad. Oil majors BP and ExxonMobil have evacuated staff from Iraq.
Brent crude futures climbed $0.360 to $113.860 per barrel, according to the ICE.
Royal Dutch Shell and BG Group gained as the news of the Iraq conflict pushed up oil prices.
Daily Mail, Boliden
Daily Mail and General Trust rallied as its Zoopla Property Group unit rose on its stock-market debut.
Boliden surged after Nordea upgraded the shares
to 'buy' from 'sell' citing earnings growth from the second quarter.
Rheinmetall jumped on reports the German defence company will sign a €2.7bn tank deal with Algeria.
Vodafone gained after the Financial Times reported that the carrier and 02 are in talks to offer Amazon.com's new smartphone to customers.
Bayerische Motoren Werke was higher following reports the maker of luxury vehicles plans to cut costs by €3bn to €4bn a year until 2020.
The euro rose 0.17% to $1.3570.