(Updates prices)
* European shares grind higher
* British pound slips as BoE holds rates at all-time low
* German business sentiment at 2-1/2 year high
* Dollar edges below two-month high
* Investors digest Fed comments
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Tom Arnold
LONDON, June 24 (Reuters) - Global shares edged up on
Thursday, while the U.S. dollar slipped further below two-month
highs as investors reassessed U.S. Federal Reserve statements on
inflation and looked to upcoming data for direction.
In Europe, the STOXX 600 extended earlier gains to
add 0.7%, bolstered by news of German business morale hitting
its highest in 2-1/2 years.
Britain's FTSE 100 share index was 0.5% higher after
the Bank of England (BoE) kept the size of its stimulus
programme unchanged and left its benchmark interest rate at an
all-time low of 0.1%, as expected.
The MSCI world equity index was 0.1% higher,
edging towards record highs hit earlier in June.
Wall Street futures pointed to a stronger open a day after
the tech-heavy Nasdaq closed at a record high. S&P 500 e-minis
and Nasdaq futures were both 0.5% firmer.
In Asia markets made smaller gains. MSCI's broadest index of
Asia-Pacific shares outside Japan was 0.2%
higher, recovering from a one-month trough touched earlier this
week, while Japan's Nikkei was unchanged.
Stock markets have whipsawed over the last week, feeling the
after-effects of a surprise projection for rate increases as
soon as 2023 by the U.S. Federal Reserve which knocked stocks,
boosted the dollar and led to the flattening of the U.S. bond
yield curve.
Investors are now pricing the first full U.S. interest rate
rise for February 2023 compared to December 2022 in the
immediate aftermath of the Fed meeting.
Overnight, 10-year U.S. Treasury yields hovered
below 1.5% in muted trading, while government bond yields in the
euro area drifted higher.
"Until bond yields break out in a sustainable fashion, in
either direction, it remains very hard to determine which
direction stocks are headed in over the near term," JPMorgan
analysts wrote in a note.
"Much continues to hinge on the upcoming growth data."
Investors awaited the latest weekly U.S. jobless claims,
expected to show that fewer Americans filed new claims for
unemployment benefits in the week ended June 19 amid an
improving job market recovery.
Germany's Ifo institute said its business climate index rose
to 101.8 from 99.2 in May. A Reuters poll of analysts had
pointed to a June reading of 100.6.
It followed the release on Wednesday of strong European
manufacturing activity data. Figures on ISM manufacturing and
U.S. non-farm payrolls are due next week.
The U.S. dollar edged further below a two-month high versus
major peers as traders navigated conflicting signals from Fed
officials on the timing of a withdrawal of monetary stimulus.
On Wednesday, two Fed officials said a period of high
inflation in the United States could last longer than
anticipated, just a day after Fed Chair Jerome Powell played
down rising price pressures.
The dollar index, which measures the greenback
against six rivals, was treading water at 91.773. It was at
92.408 at the end of last week, the highest since April 9.
The euro was a touch higher against the dollar, up
0.2% on the day at $1.19465.
Against the Japanese yen, the dollar climbed to a
15-month high of 111.11. It was last slightly weaker at 110.81.
The BoE's decision on Thursday was largely anticipated by
economists polled by Reuters who expect the central bank will
wait to see if a post-lockdown jump in inflation proves
transitory and whether unemployment rises when the government
scales back its job-protection scheme.
"The belief is that current levels of higher inflation are
nothing more than transitionary and there is plenty of slack in
the economy," said Jon Hudson, fund manager of the Premier Miton
UK Growth Fund. "With household and business confidence both
riding high, it is likely the bank will turn more hawkish in the
autumn."
After the announcement, the British pound shed 0.4%
against the dollar to $1.3907.
Oil prices dipped, but were still close to their highest in
almost three years, supported by drawdowns in U.S. inventories.
Brent crude futures fell 0.1% to $75.10 a barrel and
U.S. crude edged 0.1% down to $72.99 per barrel.
Spot gold prices added 0.3% to $1,784.3 an ounce.
(Reporting by Tom Arnold in London and Swati Pandey in Sydney;
editing by Richard Pullin, Emelia Sithole-Matarise, William
Maclean)