Global Markets: World stocks edge higher on rise in Euro, lower US inflation data

The euro rose and world stock markets edged higher on Wednesday amid tame U.S. inflation data and as the European Central Bank left its ultra-easy policy stance unchanged but warned that economic risks remained to the downside. ECB President Mario Draghi confirmed policymakers were considering whether measures are needed to mitigate the impact on European banks of the central bank`s negative deposit rates. European bank stocks declined and the yield on Germany`s benchmark 10-year bond fell to a one-week low of negative 0.039%, about 0.05 percentage point from 2-1/2 year lows they hit last month.

Major European stock indexes rose, though sentiment was capped by U.S. threats earlier this week to slap tariffs on goods from the European Union. Separately, data showed U.S. consumer prices increased by the most in 14 months in March but underlying inflation remained benign against a backdrop of slowing global economic growth. Minutes from a March 19-20 meeting of Federal Reserve policymakers show they saw the U.S. economy weathering a global slowdown without a recession in the new few years.

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Policymakers debated how to manage the Fed`s massive holding of bonds and agreed to be patient about any changes to its interest rate policy.

MSCI`s all-country equity index gained 0.26%, while the pan-regional FTSEurofirst 300 index of leading shares closed up 0.17%.

Reckitt Benckiser Group Plc shares fell 6.5% to weigh on Britain`s blue chip FTSE 100 index after the U.S. Justice Department accused Indivior Plc, a former RB unit, of illegally boosting prescriptions for its blockbuster opioid addiction treatment. Indivior shares tumbled 71.6%.

On Wall Street, the Dow Jones Industrial Average rose 6.58 points, or 0.03%, to 26,157.16. The S&P 500 gained 10.01 points, or 0.35%, to 2,888.21 and the Nasdaq Composite added 54.97 points, or 0.69%, to 7,964.24.
 
Industrial stocks closed down a bare 0.01%, after shares pared losses following the Fed minutes, as Boeing Co shares continued to weigh. The company on Tuesday reported zero new orders for its 737 MAX jet following a worldwide grounding of the aircraft in March. 
Boeing`s shares fell 1.1% but the Dow Industrials also pared losses to close slightly higher.

U.S. Treasury yields slipped, weighed down by the tepid U.S. inflation data for March, which reinforced expectations that the Fed would hold rates steady or possibly cut them by the end of the year.

"There is a persistent trend of inflation underperformance that may soon become problematic for the Fed," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York.

The benchmark 10-year U.S. Treasury note rose 8/32 in price to push its yield lower to 2.4702%. 

The euro recouped earlier losses.

The dollar index fell 0.07%, with the euro up 0.09% to $1.1271. The Japanese yen strengthened 0.13% versus the greenback at 111.01 per dollar.

Oil prices rallied more than 1 percent after U.S. data showing a deep drawdown in gasoline stocks overshadowed crude inventories rising to 17-month highs, and as sanctions and blackouts in Venezuela helped tighten global supplies.

International benchmark Brent futures settled up $1.12 to $71.73 a barrel. U.S. West Texas Intermediate (WTI) crude oil futures climbed 63 cents to settle at $64.61 a barrel.

Gold rose on Wednesday, lifted to its highest in almost two weeks as investors fretted about the global economy and trade tensions.

U.S. gold futures settled 0.4% higher at $1,313.90 an ounce.