Europe open: Stocks mixed as traders mull mixed signals

European stocks were mixed on Thursday morning, with Germany and France higher but the UK, Italy and Spain's benchmarks lower after the Federal Reserve statement overnight and ahead of Japan's stimulus decision.

The euro was up 0.45% against the dollar at 1.1108, and up 0.6% on the pound at 0.84131.

German unemployment in June came in slightly better than expected, helping lift the Dax. Compared with the same month a year earlier, the number of people in employment increased by a strong 528,000 or 1.2%.

Asian stocks had earlier delivered a mixed session following a flat US session after the Fed’s July update left investors a little uncertain about the path for US monetary policy normalisation.

Analyst Mike van Dulken at Accendo Markets said: "US data has been solid, perhaps warranting a hike in September, and it says external risks have receded, but peers are in a very different world, adding to stimulus and the outlook remains unclear, especially given what corporates are saying amid the plethora of UK, EU and US companies reporting this week.

"A weaker dollar resulting from odds of a September rate hike falling helped the Yen strengthen to the detriment of Nikkei exporters, despite expectations that the BoJ is set to add to the government's bumper stimulus package tomorrow.

"Or might it hold off like the ECB until September, waiting to see what the BoE does next week in light of Brexit?" he wondered.

In macroeconomic data, Eurozone confidence figures are expected a shade lower in July in light of the UK's Brexit vote.

Ana Thaker at Phillips Capital said the report is "likely to paint a bleak picture" of the outlook for the European economy, though consumer confidence is expected to be flat at -7.9 but could potentially undershoot.

"Any sign of weakness from the European consumer would affect ECB policy, the aim of which is to stimulate the real economy through increased lending. This will be one of the first impressions we will get from the Eurozone following the Brexit vote and following the weak PMIs from the UK, confidence will likely be shaken in the Eurozone too."

Later, at 1300 BST, German Consumer Price Inflation (CPI) is due, while committee members of the European Central Bank (ECB) Carlos Costa and Benoît Coeure are both due to speak.

Stateside, traders will watch out for the Kansas City Fed Manufacturing emulating its Dallas and Richmond Fed counterparts with a bigger than expected July rebound this week.