The European trading session got under way with the main equity benchmark indices opening with an average gain of 0.5 per cent.

Spain's risk premium rose slightly to 425 basis points ahead of the country's first bond auction since being downgraded by S&P last week. The Spanish 10-year bond yield was at 5.86% while the German bund was at 1.61%. There will also be a bond auction in France later today.

In the foreign exchange market, the euro appeared to be forming a bottom after yesterday's declines. The euro/dollar traded above 1.3150, the euro/yen recovered from yesterday to trade at 105.575, the euro/Sterling pound held above support at 0.8110, and the euro/Swiss franc remained pegged to the 1.20 level.

Carry trade currencies declined after weak data was released overnight in New Zealand, Australia, and China. The kiwi was the weakest, followed by the aussie and the loonie.

Coming up in terms of macroeconomic data is producer price data for March in the Eurozone and weekly unemployment claims, non-agricultural productivity, labour unit costs, and the ISM non-manufacturing index in the United States.

In central bank news, the European Central Bank (ECB) will hold an interest rate decision in Barcelona. The interest rate is expected to be maintained at 1.00%. ECB President Mario Draghi will then speak at a press conference.

Considering the weak economic data that has been released recently, more analysts are calling for new ECB stimulus. Some are calling for a rate cut or new quantitative easing in order to support the market.

FM

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