European stocks bounce back, dollar steady

LONDON: European stock markets rebounded Tuesday as traders tracked developments on the coronavirus pandemic and US stimulus plan.

Asian stock markets sank Tuesday following the previous day's healthy run-up, with sentiment jolted by the prospect that President Joe Biden's huge US stimulus package could be watered down and might not even be passed for several weeks.

While the S&P 500 and Nasdaq both ended Monday at record highs on Wall Street, the Dow slipped.

Elsewhere on Tuesday, the dollar steadied and oil prices rose.

"The see-saw price action between buyers and sellers continues, with yesterday's swift dip being replaced by a recovery that leaves indices roughly where they started the week," noted Chris Beauchamp, chief market analyst at IG trading group.

Investors have been on a buying spree since November, when Biden won the presidency and vaccinations began to be authorised, with additional support coming from central banks' loose monetary policy and massive government spending.

But while the general feeling is of optimism about the long-term outlook, confidence is being tested by the pandemic, its rising death toll, lockdowns and problems in rolling out inoculations.

"The rally since November has slowed noticeably but it has yet to move to the downside, and instead most indices are content to tread water, with a decent earnings season in the US and expectations of fiscal stimulus providing a reason to hang around," Beauchamp said.

The biggest driver of the market rally in recent weeks has been hope for Biden's $1.9 trillion economic rescue plan.

But there is a growing concern that it could be whittled down in congressional negotiations, with Republicans and even some Democrats concerned about its size in the wake of a $900 billion deal passed at the end of last month.

Asian traders were in a selling mood Tuesday, with Hong Kong and Shanghai suffering big losses after the People's Bank of China tightened liquidity in mainland financial markets.

Seoul shed more than two percent after data showed the South Korean economy suffered its worst year since 1998, when the Asian financial crisis rocked the region.

Key figures around 1215 GMT -

London - FTSE 100: UP 0.9 percent at 6,698.70 points

Frankfurt - DAX 30: UP 1.9 percent at 13,824.28

Paris - CAC 40: UP 1.4 percent at 5,548.37

EURO STOXX 50: UP 1.3 percent at 3,600.15

Tokyo - Nikkei 225: DOWN 1.0 percent at 28,546.18 (close)

Hong Kong - Hang Seng: DOWN 2.6 percent at 29,391.26 (close)

Shanghai - Composite: DOWN 1.5 percent at 3,569.43 (close)

New York - Dow: DOWN 0.1 percent at 30,960.00 (close Monday)

Euro/dollar: DOWN at $1.2137 from $1.2141 at 2130 GMT

Dollar/yen: UP at 103.78 yen from 103.77 yen

Pound/dollar: DOWN at $1.3674 from $1.3675

Euro/pound: DOWN at 88.75 pence from 88.79 pence

West Texas Intermediate: UP 0.4 percent at $53.00 per barrel

Brent North Sea crude: UP 0.4 percent at $56.09 per barrel