European stock markets close higher

European stock markets closed out a choppy week with modest gains yesterday as investors discounted another set of disappointing US economic data and concerns over the Greek debt crisis.

Dealers said trade was technical, with London and New York to be closed Monday for public holidays, and unconvincing as investors adjusted positions ahead of the long-weekend break.

They said the news was negative – a slowdown in US consumer spending growth, a Fitch ratings outlook downgrade from Japan and the Greek government’s failure to win opposition support for yet more austerity measures.

The banks provided some support after the sector was upgraded by some brokerages following its recent laggard performance.

In London, the FTSE 100 index of leading shares closed up 0.98 per cent to 5,938.87 points. In Frankfurt, the DAX added 0.69 per cent to 7,163.47 points and in Paris the CAC 40 rose 0.86 per cent at 3,950.98 points.

Other European markets showed similar gains. Analyst David Morrison at trading group GFT said stocks made a solid start to the day and then held on as the euro rose strongly.

European equities had a solid start this morning thanks to a bounce in the euro and a corresponding pull-back in the dollar,” Mr Morrison said.

“However, the rally in the single currency may be more technical ahead of the long weekend, rather than based on an improvement in the European debt crisis,” he added.

In Paris, Arnaud de Champvallier at Turgot Asset Management said investors wanted to look on the bright side, “counting on the fact that Germany will not allow Greece to fail” given the potential consequences for the wider eurozone.

He said the bourse opened firmer but did slip back in the afternoon after the disappointing US figures, especially on the housing market which suggested recovery was still a considerable way off.

In New York, the market was firmer, helped by strong gains in the bank, finance and oil sectors.

The blue-chip Dow Jones Industrial Average was up 0.59 per cent at around 1600 GMT while the tech-heavy Nasdaq Composite gained 0.64 per cent.

“The bulls are trying to pare losses for the week that have come courtesy of continued euro-area debt uneasiness and concerns regarding a slowdown in the global economy,” wrote analysts at broker Charles Schwab.

In Asian trade earlier yesterday, Tokyo fell 0.42 per cent after figures showed prices rose in April, the first such increase since December 2008.

Hong Kong was up 0.95 per cent but Shanghai fell 0.97 per cent as Sydney gained 0.51 per cent.