On Monday, Mario Draghi said the European Central Bank (ECB) was prepared to act and counter risks that may arise from low inflation. The next ECB policy meeting will take place on 5 June.
Draghi also observed that bank lending presented a mixed picture, with surveys of bank behaviour showing a gradually improving aggregate situation, but noted that the latest ECB survey on credit access by small and medium-sized companies show supply constraints remain especially strong in the stressed countries.
"Ever since Mr. Draghi’s comments that the ECB is “comfortable” with taking action in June to counter prolonged very low Eurozone inflation and the strength of the euro, we have expected the bank to follow through and act at its June policy meeting. Pressure on the ECB to act has been reinforced by disappointing Eurozone GDP growth of 0.2 per cent quarter-on-quarter", said Howard Archer, chief European & UK economist for IHS Global Insight.
Investors were undeterred by accusations from Vietnam that China had sunk a local fishing boat in the disputed South China Sea.
Yesterday, China announced new measures to streamline investment projects, with the National Development and Reform Commission saying authorities not arbitrarily hold up deadlines for projects. However, this was not enough to prevent the Shanghai Composite Index falling 0.2 per cent.