Euro hits year-high against dollar

A euro coin is pictured against US dollar notes. (AFP PHOTO/PHILIPPE HUGUEN)

Meanwhile, the US Republicans' struggle to push through controversial health care legislation was fuelling concerns about the chances of President Donald Trump passing his much-vaunted economic agenda, traders said.

The euro rose close to the key US$1.14 level, reaching US$1.1391 at one point, its highest level in a year.

"Wednesday's trading continued to be driven by Tuesday's news, with little to challenge either Draghi's ... comments or the latest US healthcare reform stumble for market dominance," said Connor Campbell, analyst at Spreadex trading group.

"The euro had already managed a strong Tuesday performance after Draghi subtly hinted at a slight shift in the ECB's approach to stimulus. Yet the currency soon received a second wind, hitting a 12-month high against the dollar following news that the Republicans had pushed back the Senate healthcare vote due to intra-party opposition," he added.

European stock markets were lower in Wednesday trading, mirroring falls across Asia.

Draghi on Tuesday said the EU was enjoying a newfound confidence that could unlock demand and investment. While he cautioned against winding down the bank's easy money policy, analysts said the Italian was more hawkish than expected.

'JUSTIFIED REACTION'

"We think that the euro's latest rise against the US dollar was a justified reaction to Mario Draghi's hints," analysts at Capital Economics said.

The European single currency was also up against the yen at levels not seen since April 2016, while the dollar was lower also on concerns about Trump's agenda.

Global stock markets soared in the months after the tycoon's November election victory as traders bet his plans to slash taxes and red tape while ramping up infrastructure spending would fire the world's top economy.

But his failure to pass an overhaul of Obamacare - a key campaign promise - despite his party controlling Congress has led many to question his ability to deliver his major promises.

NESTLE BUYBACK

Notable gainers among individual stocks in Europe included Nestle, up 1.1 per cent, after the company said it will buy back 20 billion Swiss francs (US$20.83 billion) worth of stock, only days after an activist fund took a stake in the food conglomerate, demanding more returns for shareholders.

"This is an additional step towards speeding up the creation of value for shareholders," said Andreas von Arx, an analyst at Baader Helvea.

Wall Street was firmer, lifted by a strong performance of financials ahead of the result of Federal Reserve stress tests for banks.

The oil price rose meanwhile on its fifth consecutive day of recovery, shrugging off the US government's announcement of rising oil inventories, concentrating instead on a drawdown of gasoline stocks.

Key figures around 1535 GMT:

Euro/dollar: UP at US$1.1357 from US$1.1300 at 2050 GMT Tuesday
Dollar/yen: DOWN at 112.15 yen from 112.33 yen
Pound/dollar: UP at US$1.2932 from US$1.2800

London - FTSE 100: DOWN 0.6 per cent at 7,387.80 points (close)
Paris - CAC 40: DOWN 0.1 per cent at 5,252.90 (close)
Frankfurt - DAX 30: DOWN 0.2 per cent at 12,647.27 (close)
EURO STOXX 50: DOWN 0.1 per cent at 3,535.70
New York - Dow: UP 0.7 per cent at 21,452.79

Tokyo - Nikkei 225: DOWN 0.5 per cent at 20,130.41 (close)
Hong Kong - Hang Seng: DOWN 0.6 per cent at 25,683.50 (close)
Shanghai - Composite: DOWN 0.6 per cent at 3,173.20 (close)

Oil - Brent North Sea: UP 7 cents at US$46.99 per barrel
Oil - West Texas Intermediate: DOWN 1 cent at US$44.23