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European equities advanced yesterday while the yen rose against the dollar amid uncertainty surrounding Tuesday’s Group of Seven (G7) statement on foreign exchange volatility.
London’s FTSE 100 index of leading companies gained 0.33% to 6,359.11 points, closing at its highest level since May 19, 2008.
Frankfurt’s DAX 30 rose by 0.67% to 7,711.89 points, and in Paris the CAC 40 climbed by 0.32% to 3,698.53 points.
“European markets have managed to maintain a positive tone despite some disappointing earnings announcements from across Europe,” said CMC Markets UK analyst Michael Hewson.
In foreign exchange activity, the dollar dipped to ¥93.43 compared with ¥93.47 late in New York on Tuesday. The euro fell to $1.3448 from $1.3454, and also fell against the yen.
Gold prices dipped to $1,645 an ounce from $1,647.50 on the London Bullion Market on Tuesday.
Markets were hit on Tuesday after the G7 warned that “excessive volatility” in exchange rates hurt economic and financial stability, as it sought to avoid talk of a so-called “currency war” before this week’s G20 gathering in Moscow.
However, the statement sparked uncertainty after an unnamed G7 official was quoted as saying that the statement was aimed at Japan. British officials reportedly insisted that it did not concern any individual nation.
The G7 statement came just days before G20 talks that will seek to address growing fears of a currency war in which nations carry out devaluations to make their exports more competitive.
Markets will also be watching a two-day Bank of Japan (BoJ) policy meeting, which wraps up today, and whether policymakers unveil fresh easing measures.
Rabobank analyst Jane Foley said the episode had merely served to underline divisions within the G7 that comprises Britain, France, Germany, Italy, Japan, the US and Canada.
“The efforts made by the G7 ... to calm fears of currency wars has instead hinted that there may be a diversity of opinion within the G7 on the topic of exchange rates,” Foley noted.
“While we have now been told that the G7 wished to signal concern about the excess moves in the yen, with the exception of verbal intervention and closed doors meetings, is it unlikely that any policy measures can be taken to counter it.”
In European corporate action, shares in Peugeot Citroen soared by over seven% to 6.40 euros in late afternoon trade, despite the French automaker reporting a record loss of 5.0bn euros.
US stocks were mixed in midday trade, with the Dow Jones Industrial Average down 0.41% to 13,961.16 points.
The S&P 500, a broad measure of the markets, slipped 0.06% to 1,518.52 points, while the tech-rich Nasdaq Composite edged up 0.09% to 3,189.44 points.