Asia & European Stocks on Fed Minutes

Posted by Reuters

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as China, Fed concerns sour mood….

Downbeat China manufacturing activity added to gloom in most Asian stock markets on Thursday, while emerging market currencies faltered as the dollar charged ahead after the U.S. Federal Reserve’s latest minutes hinted at stimulus tapering.

European shares fell on Thursday, led by financials, after the Federal Reserve signalled it may start withdrawing its monetary stimulus in the next few months. Weak data from China aggravated the decline.

Minutes of the Fed’s Oct. 29-30 policy meeting showed bank officials felt they could start scaling back the asset-purchase programme at one of its next few meetings if economic conditions warranted it.

“Talk of tapering is coming back into the markets, so the recent consolidation in the markets may be expected to continue at least until the Fed meeting next month,” Jawaid Afsar, sales trader at SecurEquity, said.

The FTSEurofirst 300 was down 8.07 points, or 0.6 percent, at 1289.31, by 0824 GMT, echoing Wall Street, which reversed course after the Fed minutes on Wednesday.

The loose monetary policy adopted by central banks globally has fed the rally in equities — European shares are up around 13 percent in 2013 — and eroded returns from other asset classes such as bonds and cash.

Banks, those most acutely exposed to the benefits of monetary stimulus, fell 0.7 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed about 1.2 percent, at one point touching its lowest point since late last week. The softer China manufacturing and Fed speculation also weighed on emerging market currencies, sending the Indonesian rupiah to its lowest mark in nearly five years.

But Japan’s Nikkei stock average .N225 bucked the region, surging 1.9 percent as the yen weakened to a four-month low against the dollar, and on plans by a major government fund to invest more of its $2 trillion funds in riskier assets.