By Tommy StubbingtonEuropean stocks steadied at seven-year highs Wednesday, after U.S. Federal Reserve Chairwoman Janet Yellen on Tuesday laid the groundwork for interest rate rises later this year.
The Stoxx Europe 600 index was 0.1% lower in early trade, having climbed to its highest close since late 2007 after an agreement on a four-month extension to Greece's bailout.
U.S. stocks had posted a modest rise to close at fresh record highs after Ms. Yellen said future interest rate rises will be clearly flagged, and noted the recent improvement in the U.S. economy. Ultralow interest rates in the world's largest economy have been a key support to stock markets around the world in recent years.
The rally ran out of steam in Europe. Germany's DAX index managed to eke out a 0.1% gain, while the U.K.'s FTSE 100 slipped back 0.2% having climbed to an all-time high on Tuesday for the first time in more than 15 years.
Greece's main stock market, which soared almost 10% on Tuesday, was down 0.1%. Greek government bonds were also steady after hefty gains.
The recent crisis seems to have been resolved for now with "a can-kicking compromise on Greek debt that was the sort of compromise markets expected", said UBS economist Paul Donovan.
In currency markets, the dollar continued to weaken following Ms. Yellen's testimony to Congress.
The euro was 0.1% higher at $1.1360, while sterling climbed 0.2% to $1.5503.
"Markets appear to have been positioned for a more definitive signal" that the Fed will alter its language on the timing of rate hikes in its March statement to remove the word 'patient', said currency strategists at BNP Paribas.
In commodities markets, Brent crude oil was 0.1% higher at $58.70 a barrel, while gold rose 1.0% to $1,209.30 an ounce.
Write to Tommy Stubbington at tommy.stubbington@wsj.com
(END) Dow Jones Newswires
February 25, 2015 04:04 ET (09:04 GMT)
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