Volkswacht Bodensee - Europe stocks drop but China stimulus lifts Asia

Traders remain aware that the ongoing crisis in the Middle East could spiral at any minute as Israel presses on with a bombing campaign of Gaza after Hamas' deadly attacks.

"Asian indices... ended the session in the green on hopes that we will see the Chinese push forward with a major fiscal spending plan," said Scope Markets analyst Joshua Mahony.

"European markets remain in uncertain territory, with indices struggling for direction of late," he added on the eve of a eurozone interest rate decision.

German business sentiment improved slightly in October, a survey showed Wednesday, but analysts warned the Israel-Hamas conflict posed new risks as Europe's top economy struggles to emerge from a downturn.

Traders also eyed a rally on Wall Street that was helped by a strong set of numbers from big-name firms including Coca-Cola, Verizon and 3M that fuelled optimism for the earnings season, with Meta set to report later.

Yet geopolitical crises continue to cast a shadow, with a broader Middle East war still possible and many fearing it could send crude and inflation soaring.

- China plan -

In Asia, Hong Kong led gains Wednesday after China approved a plan to issue 1 trillion yuan ($137 billion) in sovereign bonds to be distributed to local governments to support national disaster prevention and recovery.

The move will lift the fiscal deficit ratio for 2023 to about 3.8 percent of gross domestic product, the official Xinhua news agency said Tuesday, above the three percent usually considered Beijing's limit.

Leaders rarely alter the budget mid-year, but it did happen in 2008 after the Sichuan earthquake and during the Asian financial crisis in the late 1990s.

Bloomberg News reported that President Xi Jinping paid his first known visit to the central bank, indicating the increased focus the government is putting on the economy.

The announcement follows a series of small, targeted measures aimed at lifting the economy, which has struggled to recover from the impact of years of zero-Covid measures.

- Key figures around 1050 GMT -

London - FTSE 100: DOWN 0.1 percent at 7,381.83 points

Frankfurt - DAX: DOWN 0.3 percent at 14,836.96

Paris - CAC 40: DOWN 0.4 percent at 6,868.48

EURO STOXX 50: DOWN 0.3 percent at 4,051.47

Tokyo - Nikkei 225: UP 0.7 percent at 31,269.92 (close)

Hong Kong - Hang Seng Index: UP 0.6 percent at 17,085.33 (close)

Shanghai - Composite: UP 0.4 percent at 2,974.11 (close)

New York - Dow: UP 0.6 percent at 33,141.38 (close)

Euro/dollar: DOWN at $1.0574 from $1.0590 on Tuesday

Dollar/yen: UP at 149.92 yen from 149.91 yen

Pound/dollar: DOWN at $1.2123 from $1.2160

Euro/pound: DOWN at 87.22 pence from 87.89 pence

Brent North Sea crude: UP 0.1 percent at $88.17 per barrel

West Texas Intermediate: DOWN 0.1 percent at $83.69 per barrel

K.Sutter--VB