European stocks dented by surge in the euro
European stock markets fell sharply Tuesday as the euro surged on comments from European Central Bank President Mario Draghi. Shares in Alphabet Inc., Google's parent company will be in focus later after the EU slapped its biggest-ever fine on the internet giant for breaching antitrust rules with its online shopping service.
KEEPING SCORE: In Europe, Germany's DAX was down 0.5 percent at 12,704 while the CAC 40 in France fell 0.7 percent to 5,261. The FTSE 100 of leading British shares was 0.2 percent lower at 7,435. Wall Street looked poised for a soft open with Dow futures and the broader S&P futures down 0.1 percent.
DRAGHI SPEECH: The ECB president gave the euro a big lift after displaying optimism over the future of the economy of the 19-country eurozone. A raft of economic indicators has shown the single currency bloc to be gaining momentum. While not going so far as to say the ECB was ready to rein back its stimulus measures, Draghi did alter his language slightly to the extent that traders think that a change of policy could be coming in the next few months. Though saying the eurozone required "considerable" stimulus that was perceived as a modest change in tone to the previous form of words of "very substantial."
ANALYST TAKE: "While Draghi is among the more dovish policy makers at the central bank, there has been persistent speculation that the ECB will announce further reductions in asset purchases later this year and a more positive assessment of the economy from the President may suggest he's willing to back it," said Craig Erlam, senior market analyst at OANDA.
EURO SPIKES: That's certainly the conclusion in the currency markets, where the euro surged 0.9 percent to $1.1277. The higher currency hurt stocks as traders fretted over its impact on exports and on the prospect of looser monetary policy in the future.
YELLEN'S TURN: How the euro ends the day could hinge on comments later from Federal Reserve Chair Janet Yellen, who is due to address an audience in London on a host of international matters. The Fed has been gradually raising its key interest rate from record lows and hints about the pace of more hikes will be of interest to investors.
GOOGLE FINE: Aside from the central bankers, the focus in the markets has been on the whopping 2.42 billion-euro ($2.72 billion) fine the EU has slapped on Google. The European Commission, which polices EU competition rules, alleges Google elevates its shopping service even when other options might have better deals and said the company "gave prominent placement in its search results only to its own comparison shopping service, whilst demoting rival services." Google has been given 90 days to stop or face further fines of up to 5 percent of the average daily worldwide revenue of parent company Alphabet. Google says it is considering an appeal.
ASIA'S DAY: Japan's Nikkei 225 rose 0.4 percent to 20,225.09 while South Korea's Kospi added 0.1 percent to 2,391.95. Hong Kong's Hang Seng index edged 0.1 percent lower to 25,839.99. China's Shanghai Composite Index added 0.2 percent to 3,191.20. Australia's S&P/ASX 200 slipped 0.1 percent to 5,714.20.
OIL: Benchmark U.S. crude rose 56 cents to $43.95 per barrel in electronic trading on the New York Mercantile Exchange. Brent, the international standard, gained 69 cents to $46.52 per barrel in London.