European stock markets closed narrowly mixed yesterday as investors consolidated recent sharp gains after subdued German data pointed to slower growth later this year, dealers said.
They said a modestly firmer positive start on Wall Street limited the losses as US retail sales figures came in slightly better than expected while continued positive assessment of new bank capital rules was supportive.
Gold meanwhile hit fresh record highs as the dollar slipped, with dealers suggesting investors were still hedging their bets, buying the safe-haven metal despite the recent upturn in confidence on the US economic outlook.
Bonds, another safety-first investment, also attracted interest.
In London, the FTSE 100 index of leading shares closed up a fractional 0.03 per cent to 5,567.41 points. In Paris, the CAC 40 index added 0.19 per cent to 3,774.40 points and in Frankfurt, the DAX rose 0.22 per cent to 6,275.41 points.
European markets were lower in early trade after figures showed German investor confidence slumped badly in September, suggesting recent very strong growth may slow markedly over the balance of the year.
The ZEW institute’s sentiment indicator plunged 18.3 points to minus 4.3 points, its fifth consecutive monthly drop and its second unexpectedly sharp loss in a row.
“The drop in ZEW economic sentiment in September and July’s stagnation in eurozone industrial production confirm that the eurozone recovery is slowing again after the second quarter’s strong expansion,” said Capital Economics analyst Jennifer McKeown.
In Paris, which managed to chalk up a fifth consecutive winning day, dealer Yves Marcais at Global Equities said the market was hesitant, with investors looking closely at New York for their lead.
Banks, which led the gains on Monday after new sector capital rules were agreed, had a more subdued day.
In New York, the blue-chip Dow Jones Industrial Average came off early lows to show a gain of 0.26 per cent at around 1600 GMT while the tech-rich Nasdaq Composite index added 0.45 per cent.
US retail sales rose for a second straight month in August, gaining 0.4 per cent from July, better than forecasts for a rise of 0.3 per cent. Consumer demand typically accounts for two-thirds of a developed economy so growth in this component is absolutely essential to the recovery.
“This is slightly better than expected and shows growth and it will be supportive, but at the end of the day it is one of a myriad of numbers driving the economy,” said Jason Schenker, president of Prestige Economics.
“This piece of data does seem to support the notion that we are not likely to have a double-dip recession so this was likely to buttress prices,” he said.
Elsewhere in Europe, Amsterdam was down 0.16 per cent and Brussels slipped 0.07 per cent, Madrid gained 0.38 per cent while both Milan and Swiss stocks were flat.