European stocks close slightly lower

European stock markets closed slightly lower yesterday as investors waited for US corporate results to give them a lead and mulled over fresh moves to cool the booming Chinese economy.

Dealers said news that Beijing hiked reserve requirements for six top banks hit Asian bourses and meant Europe started off on a subdued note, with Wall Street then following suit.

The prospect of slower Chinese growth hit the miners especially hard, since the country has driven their boom years, and generally gave pause for thought as investors pondered where growth will come from if not China and Asia.

In London, the FTSE 100 index of leading shares closed down 0.19 per cent at 5,661.59 points. In Paris, the CAC 40 index dropped 0.52 per cent to 3,748.86 points and in Frankfurt the DAX slipped 0.08 per cent to 6,304.57 points.

Elsewhere in Europe, Amsterdam dropped 0.58 per cent, Brussels lost 0.54 per cent, Madrid was off 0.49 per cent, Milan fell 0.42 per cent and Swiss stocks were down 0.17 per cent.

In Asian trade earlier yesterday, Tokyo tumbled 2.09 per cent as a stubbornly strong yen hit exporters despite a warning by the government that it is ready to intervene in the currency markets again if necessary.

Hong Kong was down 0.37 per cent but Shanghai rose 1.23 per cent. Sydney lost 1.69 per cent.

Joshua Raymond of City Index in London said investors were cutting back positions ahead of Intel’s results and the minutes from the last US Federal Reserve meeting in September.

“We also have seen traders interpret the move by China to raise their bank reserve requirements... as a potential threat to global growth and this has weighed on sentiment,” Mr Raymond said.

Commodity stocks suffered badly from the China jitters, he added.

“European markets traded lower... as banks and commodity prices weighed heavy on the FTSE,” said Giles Watts, head of equities at financial spread-betting firm City Index.

“Lower metal prices pressured commodity stocks... as some investors are beginning to think commodity levels are overbought.”

In New York, the tone was cautious as the market waited for results from technology bellwether Intel, due after the markets close, and the Fed minutes.

As the US economy has slowed, the Fed has signalled it may be ready to take fresh stimulus measures to keep it on track, including a policy known as “Quantitative Easing” – effectively printing new money – and the minutes may show where the balance of the debate lies.

The blue-chip Dow Jones Industrial Average was down 0.25 per cent at around 1600 GMT, falling back through the key 11,000 points level, while the tech-rich Nasdaq composite index was up 0.15 per cent.

Dealers said the market “could be headed for a rough session, as anxiety is sweeping Wall Street ahead of the release of minutes” from the Fed’s September policy meeting, said Joseph Hargett of Schaeffer’s Investment Research.

“Uncertainty ahead of technology bellwether Intel’s quarterly earnings report is also weighing on traders.”

Many investors expect the Fed to resume QE by November against a backdrop of slowing growth and global trade tensions.