European stocks are expected to open higher Wednesday, following the momentum seen on Wall Street Tuesday. However, gains may be fragile as some analysts believe the late New York rally was not justified by the fundamentals.
\"Wall Street may have rallied last night, with the [Dow Jones Industrial Average] gaining enough to actually finish comfortably in the black,\" said Matt Buckland, a trader at CMC Markets. \"But with much of the upside being attributed to short covering rather than a shift in the underlying fundamentals, equities may remain exposed on the downside.\"
He expects London\'s FTSE 100 index to open up 30 points, or 0.7%, at 4455 and Frankfurt\'s DAX index up 52 points, or 1.1%, at 4906. He sees Paris\'s CAC-40 index opening 26 points, or 0.8%, higher at 3257.
In the U.S. Tuesday, the Dow Jones index finished 0.6% higher at 8469.11. Oil giants Exxon Mobil and Chevron led the index higher, boosted by the rising price of gasoline and crude oil as investors bet on a pickup in demand.
However, the broader Standard & Poor\'s 500 index failed to match the Dow\'s rally and closed down 0.1% at 908.35.
Bulls and bears were divided on how to interpret recent economic and corporate data. The outlook for the market hinges to a large extent on whether an economic recovery materializes, or if recent data on housing, retail sales and inventories prove to be another blip.
In Asia early Wednesday, most indexes were positive, with Japan\'s Nikkei 225 index up 0.4% and Hong Kong\'s Hang Seng index 0.6% higher.
Elsewhere, in the currency markets, the dollar briefly fell to its lowest level against the Japanese yen since Apr. 28. Investors have been selling the greenback of late on nascent signs of a recovery in the global economy, which has spurred interest in riskier currencies.
However, by 0615 GMT, the dollar was firmer at Y96.53, up from Y96.45 late in New York. The euro was trading at$1.3679, up from $1.3649.
Spot gold was up $6.40 from New York levels, at $927.65 per troy ounce, after hitting an 11-day high, helped by the dollar\'s decline.
Front-month Nymex crude oil futures were 72 cents higher at $59.57 per barrel.
