European Shares Seen Broadly Lower As Focus Shifts To ECB

(RTTNews) - European stocks are seen opening broadly lower on Thursday as investors digest the latest inflation data from China and await a European Central Bank (ECB) policy meeting.

China's consumer prices barely increased from a year earlier in March and producer price deflation persisted, increasing calls for more policy stimulus.

China's consumer price index grew by 0.1 percent year on year in March, while factory-gate prices fell for the 18th straight month.

No rate changes are expected at the ECB's policy meeting later day, with investors waiting to see whether the central bank will lay the ground to cut interest rates before the Fed.

Asian stocks drifted lower, though Chinese markets saw modest gains on expectations of more economic stimulus.

The dollar traded at a five-month high while Treasury yields stabilized after climbing by the most in at least a year overnight on speculation the Federal Reserve will be in no rush to cut interest rates.

A measure of U.S. producer price inflation, due later in the day could further impact bets on a 2024 Fed rate cut.

Oil and gold prices rose in Asian trading as investors braced for a worsening of the Middle East crisis, potentially involving Iran, the third-largest oil producer in OPEC.

Citing intelligence assessments, a Bloomberg report said a possible Iranian strike against Israel could involve high-precision missiles and drones.

U.S. stocks fell sharply overnight while bond yields surged, as signs of sticky inflation and the release of minutes of the Fed's March meeting highlighting upside risks around inflation forecasts dented hopes for a June rate cut.

The Dow fell 1.1 percent to reach its lowest closing level in almost two months while the S&P 500 shed 1 percent and the tech-heavy Nasdaq Composite gave up 0.8 percent.

U.S. consumer inflation rose 0.4 percent month-on-month in March, while the annual inflation came in at 3.5 percent. Both exceeded forecasts for a score of 0.3 percent and 3.4 percent, respectively.

Core inflation too remained hot, rising 3.8 percent on an annual basis, versus 3.7 percent expected.

The yield on the benchmark ten-year note spiked above 4.50 percent for the first time since mid-November as the latest Fed meeting minutes revealed concern among officials over stalling inflation progress. European stocks ended mixed on Wednesday, giving up some early gains on concerns over surging U.S. inflation and ahead of the ECB rate decision.

The pan-European STOXX 600 gained 0.2 percent. The German DAX edged up 0.1 percent and the U.K.'s FTSE 100 rose 0.3 percent while France's CAC 40 finished marginally lower.