European equity markets Wednesday tentatively reversed losses conceded earlier in the week, but investors seemed wary of taking large positions ahead of the publication of the U.S. Federal Reserve's latest policy meeting minutes later in the session.
The minutes are expected to shed more light on when the central bank may opt to raise interest rates, especially after two Fed officials struck a dovish tone on Tuesday.
Jeffrey Lacker warned that sluggish gains in U.S. workforce productivity seen over the last several years will likely continue to hold backoverall economic growth, while Narayana Kocherlakota said it could take nearly half a decade for inflation to get back to levels central bankers deem appropriate.
The U.S. dollar fell against the Japanese yen, erasing gains made after a strong employment report last week. In early European trade it was trading at 101.635. Two-year Treasury yields are currently around 0.506%.
Lee Hardman, a currency economist at Bank of Tokyo-Mitsubishi UFJ, warned that Wednesday's minutes should be treated with caution as they "are even more backward looking than normal."
"The subsequent release of the weaker than expected first quarter GDP report and stronger than expected payrolls report for June may have materially impacted on the Fed's outlook for the economy and policy," he added.
Elsewhere in currency markets, the Kiwi dollar soared to a 35-month high against the U.S. dollar on upbeat comments from the Reserve Bank Assistant Governor John McDermott.
The euro remained broadly steady against the U.S. dollar at 1.36175.
The Stoxx Europe 600 rose 0.1% in early trade, in line with Germany's DAX. France's CAC added 0.2% while the U.K's FTSE was broadly unchanged on the day.
Biggest gainers included easyJet PLC and International Consolidated Airlines, after shares in both fell Tuesday in the wake of Air France-KLM lowering its earnings guidance for 2014.
In commodities markets, gold climbed 0.6% to $1,324.80 an ounce, while Brent crude oil fell 0.3% to $108.76 a barrel, with the prospect of Libyan exports resuming continuing to add to the downward price pressure.
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(END) Dow Jones Newswires
July 09, 2014 04:35 ET (08:35 GMT)
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