European stock markets close little changed, euro steady

European shares closed little changed yesterday and the euro steadied as traders waited news from a US central bank meeting which decided to leave ultra-low interest rates on hold.

The US Federal Reserve outcome was largely as expected while markets had largely anticipated that debt-stricken Greece’s government would survive a key confidence vote late Tuesday.

Markets were now looking to see if Greek Prime Minister George Papandreou can push through the additional austerity measures that European leaders and investors deem imperative if there is to be another debt rescue deal.

London’s benchmark FTSE 100 index of top shares slipped 0.04 per cent to 5,772.99 points. In Frankfurt, the DAX fell 0.10 per cent to 7,278.19 points while in Paris the CAC 40 fell 0.15 per cent at 3,871.37 points.Other European markets were all slightly lower. The outcome of the vote in Athens was critical to investors who are on edge in case the European Union is unable to prevent the Greek crisis from sinking the whole eurozone project.

Athens now has two weeks to convince its European peers that it will carry out long-delayed structural reforms and privatisations to secure badly needed bailout money before its funds run out in July.“With a relatively narrow majority sealing the result, another vote next week on the actual austerity measures and the fact that some just see this as delaying the inevitable fact that the eurozone is broken beyond repair, equities may well struggle to progress any further in the near term,” IG Markets analyst Cameron Peacock said.

In the forex market, the euro was little changed at $1.4411, up from $1.4408 in New York late Tuesday. The dollar eased to 80.04 yen from 80.22 yen.

“The (Greek) focus now passes to the budget passage and implementation, which is more contentious,” Lloyds Bank analyst Adrian Schmidt said.

“But perhaps more of a concern for the euro is the lack of any real progress in designing a new debt solution for Greece and the fear is increasing that this may drag out well beyond the new deadline of early July” he said.

“This could be damaging for the euro but for today (yesterday) it seems the focus will be more on the US,” Mr Schmidt said.

Meanwhile, Federal Reserve chairman Ben Bernanke was set to give his second-ever press conference yesterday.