By Veronica Brown
LONDON, April 16 (Reuters) - European shares kept gains and
U.S. stock futures pointed up after JPMorgan Chase & Co <JPM.N>
results were not as bad as some expected, while robust euro zone
inflation swept the euro to a record high versus the dollar.
The dollar's slide ushered dollar-priced oil to a record
peak above $114 a barrel.
Markets had been jittery ahead of the JP Morgan results,
with nerves frayed at the prospect of further fallout from the
global credit crunch on corporate profitability.
Profit for the New York-based company fell to $2.37 billion,
or 68 cents per share, from $4.79 billion, or $1.34, a year
earlier, hurt by write-downs for leveraged loans and mortgages
and by an increase in credit reserves.
The result for the third-largest U.S. bank was not as dire
as some forecasts had predicted.
"Overall it is a good set of figures," said Martin Slaney,
head of derivatives at GFT Global Markets in London.
"Overall given the current turmoil in the broader market,
you've got to be happy with these figures. We are going to see
this providing support to the market today," he added.
S&P 500 futures <SPc1> were up 5.3 points, above fair value,
a mathematical formula that evaluates pricing by taking into
account interest rates, dividends and time to expiration on the
contract.
Dow Jones industrial average futures <DJc1> rose 46 points,
and Nasdaq 100 <NDc1> futures added 23 points.
The FTSEurofirst 300 index of leading European shares was up
0.5 percent to 1288.82, echoing a strong showing from Tokyo's
Nikkei average. It rose 1.2 percent <>.
Despite a tentative improvement in risk appetite and tighter
credit spreads fuelled by equity market gains, the dollar faced
wider pressure.
Analysts said overall sentiment appears split with optimists
clinging to Tuesday's stronger than expected U.S. producer price
inflation and robust U.S. regional banks' results.
The spectre of U.S. recession and the global crisis in
credit markets is continuing to fray nerves elsewhere as the
dollar gives way to a resurgent euro.
"There's still quite a bit of tension in the market. Some
people think that the worst of the banking problems is behind
us, but poor earnings and more write downs could have a hand in
setting the market's direction," said Steve Barrow, chief
currency strategist at Bear Stearns in London.
INFLATION DOMINATION
Inflation pressures, the European Central Bank's key
bugbear, stayed on the boil as euro zone consumer prices rose
one percent month-on-month, creating the highest annual
inflation rate since measurements for the euro area began in
1997 [].
"The euro zone inflation data...continues to reinforce the
hawkish stance of the ECB, and that's in stark contrast to the
Federal Reserve which we expect to continue easing monetary
policy," said Lee Hardman, currency economist at BTM UFJ.
The euro sped to a record $1.5967 <EUR=>, kicking oil on to
a historic $114.50 <CLc1>. Upside pressure on the euro has been
intensified by expectations for borrowing costs to remain at 4
percent during the rest of the year.
By contrast the U.S. Federal Reserve is expected to keep
cutting rates in a bid to stem slowing growth and stave off
recession.
Investors will next turn their attention to the U.S.
consumer price index for March as well as data on housing starts
and industrial output.
RBC Capital Markets said in a note to clients that Tuesday's
robust PPI data were a reminder of inflation being "very much
alive and well" in the United States.
"An upside inflation surprise will give more credence to the
arguments of the two Fed members...who voted for a less
aggressive easing in March," the bank said.
U.S. interest rate futures show that investors see a roughly
80 percent chance of the Fed lowering rates by 25 basis points
at its April 29-30 policy meeting, compared with a 20 percent
chance of a 50 basis point cut.
(Additional reporting by Naomi Tajitsu and Simon Falush)
(Editing by Ron Askew)
