European Central Bank says markets over-reacted to Draghi's stimulus signals

A global stock market selloff extended to Asia on Wednesday as investors grew cautious following losses on Wall Street sparked

On top of that the USA dollar fell, hitting a 10 month low against the euro and U.S. bond yields rose sharply on those comments from European Central Bank president Mario Draghi who called an end to the dangers of deflation in Europe and indication that reflationary pressures were now the chief concern.

USA futures pointed to mixed session on Wall Street on Wednesday as investors looked ahead to home sales and trade balance data.

"ECB Vice President Vito Constancio further added that Draghi did not say anything new in his speech that was not totally in line with the ECB's current policy". Though saying the eurozone required "considerable" stimulus that was perceived as a modest change in tone to the previous form of words of "very substantial".

The EUR/USD was trading at $1.1363, up 0.23%; the pair has ranged from a low of $1.13286 to a peak of $1.13890 in today's trading session.

"This just proves how trapped they are that after just one speech and the market reaction that followed has the European Central Bank already in a tizzy", said Peter Boockvar, chief market analyst at The Lindsey Group.

Major European benchmarks turned modestly higher as the euro declined, but many of them eventually settled slightly in the red.




YELLEN'S TURN: How the euro ends the day could hinge on comments later from Federal Reserve Chair Janet Yellen, who is due to address an audience in London on a host of global matters.

Investors have sold government bonds this week amid worries their value might fall if the central bank starts reducing its massive bond-buying program sooner than expected. The European Commission, which polices EU competition rules, alleges Google elevates its shopping service even when other options might have better deals and said the company "gave prominent placement in its search results only to its own comparison shopping service, whilst demoting rival services".

France's 10-year yield fell 3 basis points over the day to 0.70 per cent as investors moved back into the debt, having been up 15 basis points earlier.

Indices: In Frankfurt, the export-heavy DAX 30 lost 0.8% at 12,566.96. Australia's S&P/ASX 200 slipped 0.1 percent to 5,714.20. Europe's technology sector shed 1.2% and Asian tech companies moved lower following declines in their USA counterparts, which helped the Dow Jones Industrial Average and the S&P 500 post their biggest daily declines in more than a month.

West Texas crude oil rose overnight to $US44.69 a barrel, the price of a barrel of Tapis was also higher at $US47.99 and spot gold had edged up to $US1,248.82 an ounce.

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