European stocks dipped on Thursday as disappointing earnings from U.S. tech heavyweights Google and IBM dampened the previous session's upbeat tone on Wall Street, and the dollar weakened on dovish remarks from the Federal Reserve. Google Inc fell as much as 6 percent after first-quarter revenue fell short of Wall Street targets and margins narrowed as its ads prices decline persisted. Shares in IBM Corp fell as much as 4 percent after the world's largest technology services company reported its lowest quarterly revenue for five years as it struggles with falling demand for storage and server products. European stocks fell 0.14 percent, with upcoming Easter holidays, profit warnings from French spirits maker Remy Cointreau and German business software maker SAP and tensions over Ukraine also weighing.
Persistently low inflation poses a more immediate threat to the U.S. economy than rising prices, Federal Reserve Chair Janet Yellen said on Wednesday, stressing that the U.S. central bank would be delivering policy stimulus for some time to come. In her second public speech since taking the Fed's helm, Yellen was careful not to predict when interest rates would rise from near zero. Instead, she stressed the decision would hinge on healing in the labor market and on how briskly inflation rises toward the Fed's 2 percent goal. Yellen's relatively staid remarks to the Economic Club of New York intensified somewhat when Martin Feldstein, a Harvard University professor and former adviser to President Ronald Reagan, asked her whether she would let inflation creep above 2 percent to give the economy a bit more support.
Since taking the helm of India's central bank, Raghuram Rajan's agenda to reform markets has put the noses of Mumbai bond traders firmly out of joint by upending practices that provided them with a relatively secure rate of return. Benchmark 10-year bond yields have risen more than half a percentage point since Rajan took office on September 4, as the Reserve Bank of India (RBI) has sharply restricted bond purchases and announced an unexpected shift in the focus of monetary policy to consumer inflation from wholesale prices. While the dealing community in India's financial capital concedes that Rajan's reforms are necessary for the longer term, many traders complain that he has gone too far too quickly, and without consulting the markets. Their gripes stand in contrast with the high-profile central bank chief's glowing global reputation as a capable technocrat who has been instrumental in guiding the rupee through its worst turmoil since India's balance of payments crisis in 1991.