(Updates throughout)
By Elizabeth Howcroft
LONDON, Feb 10 (Reuters) - European stocks fell in early
trading on Friday as investors fretted about the impact of rapid
interest rate hikes on growth, while the yen surged on reports
that academic Kazuo Ueda was likely to be appointed Japan's next
central bank governor.
Richmond Fed President Thomas Barkin said tight monetary
policy is "unequivocally" slowing the U.S. economy, allowing the
Federal Reserve to move "more deliberately" with any further
interest rate increases.
Asian stocks were heading for a second weekly loss, while
the MSCI World Equity Index was down 0.3% on the
day at 0924 GMT, on track for its worth week since December.
Europe's STOXX 600 was down 0.6% , while London's
FTSE 100 was down 0.2% >
Maximilian Kunkel, chief investment officer for Germany and
global family and institutional wealth, said that recent
earnings reports, particularly for U.S. technology companies,
have hit market sentiment.
"The focus is shifting away from the positive impact of
disinflation towards concerns around growth."
"People (are) realizing that the earning season hasn't
actually been all that great," he said. "Investors are starting
to expect lower profit margins as inflation comes down."
The U.S. dollar index was little changed, at around 103.26 , while the 10-year U.S. Treasury yield was a touch higher
at 3.6883% , close to a one-month high.
Money markets now expect a peak in the current Fed rate
cycle around 5.15% in July. The Japanese yen broadly strengthened after reports that the
Japanese government was set to appoint academic Kazuo Ueda as
the central bank's next governor.
The dollar was down 0.5% against the yen, with the pair at
130.895 .
"The news surprised the market as he would bring a bit more
of a hawkish tilt to monetary policy than the top contender,
Masayoshi Amamiya," ING said in a note to clients, adding that
the market reaction could prove "temporary".
"We don't think he is expected to immediately change the
BoJ's policy stance," ING said.
In Europe, German government bond yields edged higher,
heading towards their most significant weekly rise so far this
year as European Central Bank policymakers fought back against
market expectations for a quick end to rate hikes.
The benchmark 10-year German yield was at 2.356% .
Britain's economy showed zero growth in the final three
months of 2022, gross domestic product data showed.
Meanwhile, oil prices jumped more than 2%, heading for
weekly gains, as Russia announced plans to reduce oil production
next month
Brent crude futures were up 2.5%, while U.S. West
Texas Intermediate (WTI) crude futures were up 2.6%.
Investor focus is now on the crucial U.S. consumer price
data due Tuesday.
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(Reporting by Kevin Buckland; Editing by Kim Coghill and Arun
Koyyur)
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