Markets muted despite more Chinese easing hope

LONDON — Markets were muted Thursday as trading levels sank in the traditional summer lull that grips trading desks in Europe and the U.S., and as investors opted to stay on the sidelines in the run-up to policy statements from the world’s leading central banks.

Investors across the world have been fairly optimistic over recent weeks on hopes the world’s central banks will do more to shore up the global economy.

While the European Central Bank is expected to restart its bond-buying program to keep a lid on the borrowing rates of Spain and Italy, the U.S. and Chinese monetary authorities are widely tipped to back more easing measures to boost their economies.

Chinese Premier Wen Jiabao, during a visit to eastern China earlier this week, was quoted by the official Xinhua News Agency as saying the country has the “conditions and capabilities” to meet its 7.5 percent economic growth target this year.

That raised expectations that the People’s Bank of China would either lower the ratio of funds that banks must hold as reserves, known as the reserve requirement ratio, or lower interest rates. The bank so far this year has lowered both twice in an effort to boost lending and spur growth.

However, major announcements from any of the three central banks are not expected until the end of the month and without much of a steer, investors are more than happy to leave things as they are. That’s certainly been the trend this week, the height of the summer holidays in many countries.

“In what can perhaps be seen as symptomatic of the fact so many people are on holiday right now, even talk from China hinting at more policy easing hasn’t been sufficient to deliver the `shot in the arm’ that it arguably warrants,” said Mike McCudden, head of derivatives at Interactive Investor.

In Europe, the FTSE 100 index of leading British shares was down 0.2 percent at 5,824 while Germany’s DAX was unchanged at 6,946. The CAC-40 in France was 0.1 percent lower at 3,446.

Wall Street was poised for a subdued opening too, though weekly jobless claims figures could have an impact if they shift expectations of what the Federal Reserve is likely to do at its policy meeting next month. Both Dow futures and the broader S&P 500 futures were up 0.1 percent.

It was equally quiet in other markets, with the euro down 0.1 percent at $1.2270 and the benchmark New York oil price 4 cents lower at $94.29 a barrel.

Earlier in Asia the day, stocks in Japan posted solid gains, with the Nikkei 225 index rose 1.9 percent to close at 9,092.76 — its highest finish in six weeks. Hong Kong’s Hang Seng closed lower after shedding morning gains, ending 0.5 percent lower at 19,962.95. South Korea’s Kospi was slightly up at 1,957.91.

In mainland China, the Shanghai Composite Index lost 0.3 percent to 2,112.20 while the smaller Shenzhen Composite Index lost 0.8 percent to 879.94.