Draghi: ECB will be cautious in adjusting stimulus effort

Unstable EU on the brink as inequality threatens to tear bloc apart, ECB warns

Technology stocks fell 0.6 percent, taking their cue from losses in USA peers in the previous session, with stocks involved in cybersecurity and virus protection failing to get a boost from the latest cyber attack that swept the globe.

Draghi "offered the first inclination that central bank stimulus could soon be wound in", Jasper Lawler, a market analyst at London Capital Group, wrote in a note, Bloomberg reported. Draghi was only one of several speakers in Portugal at the annual policy forum held by the European Central Bank.

"There's a vulnerable political and vulnerable economic backdrop (for the UK) and you layer on the more constructive attitude with respect to politics and economics in the euro zone and therefore we get euro sterling trending higher", said Rabobank strategist Jane Foley.

Having made record highs during the past two months on expectations that exporters will post strong earnings, South Korea's KOSPI .KS11 rose a further 0.3 percent. When they end, rates should rise, meaning higher costs for longer-term borrowers such as people with house mortgages. The yield for the 10-year German benchmark bond, or the bund, jumped 6.4 basis points to 0.311%, while the yield for the 10-year French government bond, climbed 7.7 basis points to 0.684%. The 10-year Treasury yield rose to 2.19 percent from 2.13 percent late Monday. It was spooked after the US Senate delayed voting on a healthcare reform bill, rekindling worries about the timeline of Donald Trump's business-friendly policies.

"He surprised the market with that upbeat stance", said Tom di Galoma, a managing director at Seaport Global in NY.

Economic growth in the Euro-zone is accelerating at a faster pace this year and with the U.S Federal Reserve already tightening policy through interest rate increases, it seemingly won't be long until the European Central Bank follows suit.

The announcement from Draghi yesterday has spurred speculation that the European Central Bank is more likely to scale down monetary easing and that will provide a significant boost to the Euro. The head of the Federal Reserve, Janet Yellen, and one of her lieutenants, Patrick Harker, said on Tuesday that they expected to continue raising USA interest rates, but it couldn't rally the dollar.

The euro rose about 1.5 per cent, its biggest daily percentage gain against the dollar in more than a year.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent in early trading, while Japan's Nikkei share average also slipped 0.2 percent.

The U.S. Federal Reserve raised interest rates for the second time in three months on June 14 and said it would begin cutting its holdings of bonds and other securities this year.

"If we want to bring inflation to our target of below but close to 2 percent then we have to persist in the type of monetary policy that we been adopting".

Brent crude futures were down 0.2 per cent at $46.55 per barrel.

General Mills rose 1.6 percent to $56.46 after the Cheerios maker's quarterly profit beat estimates.

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