European stocks struggle as traders eye historic impeachment bid

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European markets
European markets
Adam Gault

European equities struggled and the dollar traded mixed Wednesday, with traders on edge ahead of the likely historic second impeachment of US President Donald Trump, dealers said.

Sentiment was capped also by worries about the surge in Covid-19 infections, which has caused several countries to reimpose lockdowns as they battle to roll out vaccines.

In early afternoon deals, London stocks edged 0.1% lower, Frankfurt dipped 0.3% and Paris flatlined.

Shares crept higher in Asia earlier with hopes for another vast US virus relief package largely offset by the political upheaval in Washington.

Oil prices and bitcoin steadied.

"The impeachment of President Trump looked a long shot over the weekend - but if US press reports are to be believed, momentum appears to be building toward larger support within the Republican Party to impeach," noted MUFG economist Derek Halpenny.

"The shift is being fuelled by more violent footage of the attack on Capitol Hill last week - with matters made worse by Trump's lack of remorse."

Democrats are pushing ahead with impeachment proceedings against Trump, who is accused of inciting last week's storming of the Capitol Building.

In response, Trump has warned of "tremendous anger" across the country, while there are concerns of further unrest in the lead up to Joe Biden's January 20 inauguration.

Trump's second impeachment could also overshadow Biden's first few months in office and distract from his goal of pushing through a third rescue package for the US economy that he has said would be worth trillions of dollars.

"A lot changes in a week and that timeframe has taken Donald Trump from hoping to overturn his election loss -- to merely hoping he can remain in the White House for another week," said IG analyst Joshua Mahony.

In London, the British pound rallied as high as $1.3685, close to a 2.5-year peak, after Bank of England governor Andrew Bailey distanced himself from the idea of negative interest rates - but he still warned Britain faced its "darkest hour" due to the virus fallout.

The Bank of England last year slashed its key interest rate to a record-low 0.1% as it sought to counter the impact from the coronavirus pandemic, sparking speculation it could even move into negative territory.

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