European Shares Seen Up On Recovery Hopes

European stocks are likely to open higher on Wednesday after a private survey showed China’s services sector returned to growth last month for the first time since January.

The Caixin/Markit services Purchasing Managers’ Index (PMI) rose to 55.0 in April from 44.4 in April, hitting the highest level since late 2010.

Asian markets hovered near three-month highs as hopes for V-shaped recovery coupled with expectations of central bank policy support helped investors shrug off rising geopolitical risks.

Meanwhile, speculation is rife that the European Central Bank will deliver additional stimulus by around 500 billion euros, when it meets on Thursday.

Policymakers “will need to consider negative interest rates” in getting the U.S. economy back to strong growth, St. Louis Fed economist Yi Wen said in a paper.

Fed officials will provide new forecasts for the economy and the appropriate path for interest rates at their June 9-10 meeting.

The dollar weakened and gold prices dipped while oil prices hovered near three-month highs on hopes for output cuts. Treasuries held steady after Tuesday’s retreat.

Unemployment and final Purchasing Managers’ survey results from euro area are due later in the session, headlining a busy day for the European economic news.

Across the Atlantic, trading may be impacted by reaction to reports on private sector employment, service sector activity and factory orders.

U.S. stocks advanced overnight as investors looked past nationwide civil unrest and U.S.-China tensions to focus on improvement in the Covid-19 heath crisis and the gradual reopening of businesses.

The Dow Jones Industrial Average rallied 1.1 percent, the tech-heavy Nasdaq Composite rose about 0.6 percent and S&P 500 added 0.8 percent.

European markets hit their highest level in almost three months on Tuesday amid hopes of economic recovery.

The pan European Stoxx 600 rallied 1.6 percent. The German DAX spiked 3.8 percent, France’s CAC 40 index jumped 2 percent and the U.K.’s FTSE 100 gained 0.9 percent.

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