ECB faces key stimulus decision as Draghi era nears end

ECB faces key stimulus decision as Draghi era nears end

ECB faces key stimulus decision as Draghi era nears end

Germany's 30-year benchmark bond yield briefly broke into positive territory for the first time in more than a month, while US Treasury yields climbed to 18-day highs.

The bond moves comes as markets are gearing up for Thursday's European Central Bank (ECB) meeting, which is widely expected to deliver a cut to interest rates and point to further bond-buying stimulus.

"As we wait on news on Thursday morning, it's not surprising that people have the jitters of what they're going to hear from the European Central Bank, which has been the focus of attention since the beginning of August", said Jim Vogel, interest rates strategist at FTN Financial in Memphis, Tennessee.

Germany's DAX rose after Finance Minister Olaf Scholz said the country was ready to inject "many, many billions of euros" into the economy to counter any economic downturn.

The U.S. Federal Reserve is also widely expected to cut interest rates next week as policymakers attempt to protect the global economy from risks, such as Britain's exit from the European Union. Anything below that will add to the view there are more rate cuts on the immediate horizon.

Now, a new round of global rate cutting risks taking on a competitive edge as policymakers try to stay ahead of rising trade tensions, a volatile investment climate, and a shift in the political mood from shared support for globalization to a more zero-sum battle over a slower-growing world economy.

Growth concerns knocked sentiment as data from China's National Bureau of Statistics showed that factory gate prices contracted for a second successive month in August, dropping by 0.8% compared to a year earlier.

The pan-European STOXX 600 index .STOXX rose 0.10%, while MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.15%.

"While the enormous slide in China factory gate prices reminded us of what we already know, USA tariffs are sinking the Chinese economy and at a much quicker pace than anyone could have imagined".

However, Germany's export-oriented DAX index turned positive, helped by a Reuters report that Bank of Japan policymakers are now more open to discussing the possibility of expanding stimulus at their September 18-19 board meeting due to the broadening fallout of the US-China trade war.

And climbing bond yields helped lift European banking stocks 1.8%, making financials the best performing sector on the continent.

The kiwi was trading at 58.14 euro cents at 8am in Wellington from 58.21 euro cents at 5pm and at 64.19 U.S. cents from 64.31 cents. The dollar was flat against the Australian dollar at US$0.6860 and steady on the yen and the New Zealand dollar. The euro was flat at $1.104 after reaching an overnight high of $1.1067.

US crude traded at $57.97 a barrel after hitting the highest since July 31. Saudi Arabia is OPEC's de facto leader.

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