European Markets Rallied On Yellen's Cautious Comments

(RTTNews) - The European markets rallied Wednesday, as investors had their first opportunity to react to cautious comments from Federal Reserve Chair Janet Yellen yesterday. The comments triggered a weakening of the U.S. dollar. The drop in the dollar lead to an increase in commodity prices, which provided a boost to energy and mining stocks.

In a speech to the Economic Club of New York, Yellen said she considers it appropriate for the Fed to proceed cautiously in adjusting monetary policy given the risks to the economic outlook.

The speech largely offset a recent uptick in speculation that the Fed will raise interest rates at its next meeting toward the end of April.

Negative interest rates are not the main policy tool of the European Central Bank for boosting inflation and growth, and they will not be lowered deeper into "absurdly" negative territory though further moves cannot be ruled out, ECB Executive Board Member Benoit Coeure said.

In an interview with Politico, which was published on the ECB website on Wednesday, Coeure said banks have improved their interest margin amid stronger credit demand and lower risk. They can be reassured about the possible adverse effects of negative interest rates on their profitability, he added.

"They know we will not take rates into absurdly negative territory," the policymaker said.

"But we can never rule out further moves. That would not be credible anyway."

Coeure maintained that the ECB still had several tools to boost inflation and support economic growth even after a slew of measures announced earlier this month that included a reduction to all of its main three interest rates and a new long term refinancing operation.

The Euro Stoxx 50 index of eurozone bluechip stocks increased 1.31 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 1.06 percent.

The DAX of Germany climbed 1.60 percent and the CAC 40 of France rose 1.78 percent. The FTSE 100 of the U.K. gained 1.59 percent and the SMI of Switzerland finished higher by 0.61 percent.

In Frankfurt, retail giant Metro soared 11.52 percent after saying it plans to split into two companies.

E.ON increased 6.70 percent and peer RWE jumped 5.51 percent.

ThyssenKrupp surged 8.39 percent and Salzgitter leaped 5.26 percent.

In Paris, Alstom climbed 0.04 percent. The speed-train maker unveiled its strategy and objectives for 2020 with the aim to increase sales by around 5 percent a year by 2020.

Carrefour gained 3.76 percent after São Paulo-based Península acquired an additional 2.98 percent stake in the supermarket chain.

Technip increased 6.22 percent and Total added 2.33 percent.

In London, Premier Foods jumped 4.42 percent after U.S. spice-maker McCormick increased its offer for the UK food manufacturer to 65p a share.

GlaxoSmithKline rose 1.44 percent after Citigroup upgraded its rating on the stock to "Buy" from "Neutral."

Mining stocks bounced back following yesterday's weak performance. Anglo American surged 11.81 percent and Rio Tinto gained 5.90 percent. BHP Billiton leaped 5.81 percent and Glencore climbed 5.39 percent. Antofagasta also advanced 3.46 percent.

Eurozone economic sentiment fell to its lowest level in more than a year in March, despite additional easing measures taken by the European Central Bank to tackle the deflation treat and stimulate growth. The economic sentiment index dropped to 103 from a revised 103.9 in February, survey results from the European Commission showed Wednesday. The third consecutive fall took the index to its lowest level since February 2015, when the score was 102.2. Economists had forecast the index to remain at February's original score of 103.8.

Germany's consumer prices rose at a faster-than-expected pace in March after remaining unchanged in the previous month, preliminary estimates from Destatis revealed Wednesday. The consumer price index climbed 0.3 percent year-on-year following no change in February. Economists had forecast 0.1 percent rise.

England/Wales house prices grew at a slower pace in February, data from Land Registry showed Wednesday. House prices increased 6.1 percent year-on-year in February, slower than January's 6.5 percent growth.

Chinese consumer confidence improved strongly to its highest level in six months in March, results of a survey by the Deutsche Boerse Group's MNI Indicators showed Wednesday. The Westpac MNI consumer sentiment indicator rose 6.1 percent to 118.1 in March from 111.3 in February, to its highest level since September 2015.

Partly reflecting strong job growth in the trade, transportation and utilities sector, payroll processor ADP released a report on Wednesday showing slightly stronger than expected U.S. private sector job growth in the month of March.

ADP said private sector employment increased by 200,000 jobs in March after jumping by a downwardly revised 205,000 jobs in February. Economists had expected employment to climb by about 195,000 jobs compared to the addition of 214,000 jobs originally reported for the previous month.