European stocks struggle for direction, euro firms

European stock markets struggled for direction in listless trading yesterday, with investors awaiting key reports later in the day on US housing prices and December consumer confidence.

On the currency market the euro firmed to $1.3225 from $1.3161 late on Monday.

Stock market players in Paris set aside concerns over China’s decision on Saturday to raise benchmark interest rates to fight inflation and focused on the US data. The London Stock Exchange was closed for the second consecutive day for a bank holiday.

In Paris, the CAC 40 was up 0.37 per cent in mid-morning trade at 3,876.51 points.

Telecom equipment maker Alcatel-Lucent led the advancers, rising 1.29 per cent after agreeing to pay $137 million in fines and penalties to settle US charges it paid bribes to win contracts in Latin America and Asia.

After taking a battering on Monday, banks bounced back. BNP Paribas gained 0.67 per cent and Societe Generale 0.26 per cent.

The Frankfurt DAX in hesitant early trade rose 0.01 per cent to 6,971.45 points, as the auto sector recovered slightly from big losses on Monday in response to a decision by the city of Beijing to cut new car registrations by two-thirds to ease its massive traffic jams.

German auto makers are heavily engaged on the Chinese market.

Daimler gained 0.04 per cent and BMW 0.2 per cent. Volkswagen slipped 0.04 per cent. On Monday each of them lost more than four per cent.

Societe Generale analyst Olivier Korber said meanwhile that on the currency market “all is calm, with investors taking no positions as they await the end of the year.” Currency traders too were keeping an eye on the US housing and consumer confidence data.

“Investors expect the figures to be bad,” said Rene Defossez of Natixis bank.

“If their fears are confirmed, it could be very negative for the dollar.”

Asian stock markets closed mostly lower yesterday as traders returned to the Hong Kong bourse for the first time since China raised interest rates on Christmas Day.

Tokyo ended lower on the back of a strengthening yen but investors were broadly ignoring a batch of economic data showing Japanese consumer prices have been slipping every month for almost two years.

Hong Kong shed 0.93 per cent and Shanghai dropped 1.74 per cent.