World Economy

European Shares Higher, Asia Slips

European Shares Higher, Asia SlipsEuropean Shares Higher, Asia Slips

European shares opened higher on Tuesday, with Vodafone among the leading gainers after a strong earnings report, although political uncertainty continued to weigh on Portuguese stocks.

The pan-European FTSEurofirst 300 index rose 0.28% and the eurozone’s blue-chip Euro STOXX 50 index gained 0.35%, Reuters reported.

Vodafone rose 2.7% after the British phone group reported a better-than-expected acceleration in second-quarter revenue growth, helping it nudge its annual expectations towards the top of its guidance.

But Vallourec fell more than 6% after reporting a third-quarter loss against a backdrop of falling demand from its oil and gas customers and said it did not expect market conditions to improve in the short-term.

Portugal’s PSI 20 index fell 0.86%.

Surprisingly strong US jobs data released on Friday has dramatically changed investors’ perception on the Federal Reserve’s monetary policy track, with money market futures pricing in more than a 70% chance of a rate hike next month.

The 10-year US bond yield touched a 3-1/2-month high of 2.37% on Monday and last stood at 2.34%. The two-year treasuries yield hit 5-1/2-year high of 0.95% on Friday and was last at 0.89%.

Investors, worried that rising borrowing costs could crimp profit margins of many businesses, took profits from recent gains in global equities.

On Wall Street, the S&P 500 index suffered its worst loss in six weeks on Monday, falling 1%.

 Grim Reminder

 Asian shares slipped to one-month lows on Tuesday as the specter of higher borrowing costs in the United States and slower global economic growth prompted investors to trim their exposure to riskier assets.

Over the weekend, financial markets were served a grim reminder of soft patches in the global economy in the form of disappointing Chinese trade figures. Focus now turns to consumer and wholesales price data from China later in the day.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4%, while Japan’s Nikkei dropped 0.8% from a 2 1/2-month high hit on Monday.

The Topix fell 0.8% in Tokyo, while South Korea’s Kospi index lost 0.5%. New Zealand’s S&P NZX 50 Index slid 0.7%. Australia’s S&P/ASX 200 Index dropped 1.2%.