LONDON (Reuters) - The euro rose to its highest in a month but world stocks wilted on Thursday, as the European Central Bank prepared to pull the plug on its 2.55 trillion-euro, three-year stimulus program.
After the Federal Reserve raised U.S. interest rates for the second time this year and hinted at two more, it was shaping up to be a double-whammy for risk assets that have risen sharply in value during years of ultra-cheap borrowing.
All sectors on the pan-European STOXX 600 index were in negative territory. Basic resources stocks led the decline with a 1.5 drop .SXPP after weak economic data too from big metals consumer China. [.EU]
The dollar .DXY had popped higher after the Fed's move, but faded in Asia and was still falling as the euro pushed above $1.1820 EUR=EBS before the ECB decision.
Euro zone government bond yields also edged up with Germany’s Bunds offering 0.49 percent DE10YT=RR versus the 2.96 percent from U.S. Treasuries US10YT=RR which had briefly topped 3 percent overnight.
“I think its pragmatic for the Fed to take these moves, because if you are not going to make them now, when are you going to take them,” Kully Samra, European managing director at $3 trillion U.S. asset manager Charles Schwab, said.
The ECB had probably been too slow to reduce stimulus, Samra added, though recent weaker data showed Europe still had underlying issues.
Also keeping investors in check were concern about U.S. threats to impose tariffs on $50 billion of Chinese goods. U.S. President Donald Trump will meet with his trade advisers later to decide whether to activate the tariffs, a
