European Stocks Trade Mixed Ahead of Fed Minutes

LONDON (The Deal) -- European markets were mixed Wednesday, with a more nuanced message on interest rates from the Bank of England, fears of a huge fine for French bank BNP Paribas overhanging the French market and some investors still hoping for direction on U.S. policy from the minutes of the Federal Reserve's most recent meeting to be released later in the day.

Shares in BNP Paribas fell 1.8% to 50.76 euros on a report that the U.S. authorities could seek more than $5 billion in settlement of a sanctions busting investigation. France's largest bank is alleged to have violated sanctions on trading with Sudan and Iran. As well as a damaging fine, Bloomberg reported that New York Superintendent of Financial Services Benjamin Lawsky has also floated the possibility of temporarily banning BNP Paribas from transferring money in and out of the U.S. Nevertheless, by late morning in Paris, the CAC 40 index had recovered from its early weakness and was up 0.02% at 4,453.

In London there was good news in the form of better than forecast retail spending in April, with consumers' spending up 1.3% month on month compared with a predicted 0.5%, and the Office of National Statistics also revised upward its March figure from 0.1% to 0.55. The April figure was also up 6.9% from a year ago.

But the Bank of England, Britain's central bank, noted in the minutes from the last meeting of its Monetary Policy Committee that the decision on when and whether to raise interest rates from their historic low of 0.5% was now becoming "more balanced" for some members. Although the vote to keep interest rates at their current level was unanimous at the May meeting, and the committee said it will want to see more evidence that some slack is coming out of the U.K. economy, one or two members may be becoming more hawkish.

Also in London, a number of key stocks fell after going ex-dividend. Banking group HSBC Holdings (HBC) was the most important of these, falling 1.56% to 617.3 pence. Meanwhile major retailers, such as the supermarket chain Wm. Morrison and food and clothing group Marks & Spencer  lost ground after broker downgrades. London was down 0.1% at 6,795, while in Frankfurt, the DAX was off 0.29% at 9,666.

In Asia, the Tokyo market was once again hit by a strong yen, which affects exports, and indications from the Bank of Japan that it is in no hurry to offer new stimulus measures for the country's sluggish economy. The Nikkei was down 0.24% at 14,042.17.

 

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