European shares made fragile gains this morning on the back of hopes a weak run of US data could prompt Federal Reserve chief Ben Bernanke to give some hint that more stimulus is in the pipeline for the world's largest economy.
The minutes to the Fed's last meeting, however, sounded a more cautious note last week, keeping hopes of a strong message from Mr Bernanke muted while the summer holiday season is also helping keep markets in a tight range.
The FTSEurofirst was up 1.53 points, or 0.2 per cent, at 1045.24, by 07:48 GMT, adding to the previous session's 0.1 per cent rise as the index remained stubbornly within its range between 1,030 and 1,050.
"Until we get a clearer outlook on key economies, (markets) are going to go nowhere fast," Richard Jeffrey, chief investment officer at Cazenove Capital Management, said.
"I think people are going to be tempted to be more defensive in this sort of environment and the key call will be when to take on more risk and that will be later on this summer."
Weak volumes again highlighted investor caution as did the performance of defensively perceived pharmaceuticals, which was one of the top performing sectors, with the likes of Akzo Nobel up 1.4 per cent.
“The environment for Fed Chairman Bernanke's monetary policy testimony is becoming more supportive to arguments for the introduction of QE3," a London-based trader said.
Central bank action in Europe and China has helped the FTSEurofirst rally more than 9 per cent in the last 6 weeks, although shares remains more than 5 per cent off March 2012 highs, when the index retreated as euro zone debt fears resurfaced.
The ongoing euro zone saga has weighed on the outlook for corporate profitability as companies fight the threat of failing global growth and lack of action from politicians.
Telecom equipment maker Alcatel-Lucent tumbled more than 12 per cent as it said it will miss 2012 profit guidance after losing €40 million in the second quarter.
The results had a knock on effect for Nokia, which fell 4 per cent, as "short" bets that the Finnish manufacturer's shares will weaken have risen to an all-time high ahead of its second quarter results on Thursday.
Elsewhere, British plumbing and building supplies group Wolseley was feeling the pinch of tough economic conditions, down 3.5 per cent, after it said it could shut its French business because of the difficult market conditions hitting trade in continental Europe.
Reuters