Successful bond auctions in Italy and Spain gave European stocks and the euro a boost yesterday although poor results and weak economic data in the United States later trimmed gains.
Frankfurt’s DAX 30 ended the day up 0.44 per cent at 6,179.21 points, while London’s FTSE index of leading companies closed down 0.15 per cent at 5,662.42 points and the CAC-40 index in Paris also gave up 0.15 per cent to 3,199.98 points.
Milan’s FTSE Mib gained 2.09 per cent and Madrid’s Ibex 35 ended flat.
The euro climbed back above the $1.28 level after comments from European Central Bank chief Mario Draghi said that the bank’s decision to make unlimited liquidity available to eurozone banks was helping to stabilise the region’s crisis-ridden economy.
The European single currency advanced to $1.2822 at 1700 GMT from $1.2707 in New York late on Wednesday, having touched on Monday a 16-month low at $1.2662 on eurozone debt crisis worries.
“Successful Spanish and Italian bond auctions this morning have seen borrowing costs ease in the bond markets, and this helped boost financials across Europe” as well as the euro, said Michael Hewson at CMC Markets.
Spain aced its first bond test of 2012 under a new right-leaning government, locking in sharply lower borrowing rates and raising far more money than first planned.
Investors flocked to the issue and the Treasury took advantage of the cheaper rates to raise about €10 billion – twice the original target.
Italy, meanwhile, raised €12 billion in its first bond auction of the year on Thursday, with borrowing rates for short-term funds down sharply in a sign of improving market confidence.
Across in Frankfurt, the European Central Bank held its key interest rates steady as expected, leaving eurozone borrowing costs at historical lows as it assessed the impact of two straight months of rate cuts.
And in London, the Bank of England left interest rates at a record low 0.50 per cent and maintained its stimulus plans, despite concern over the fragile British economy and the eurozone debt crisis.
Comments later by Mr Draghi that recent moves to provide banks with unprecedented amounts of liquidity were proving effective in tackling the debt crisis helped the euro make more gains against the dollar, especially given weak US data. British stock market gains were meanwhile tempered by a gloomy trading update from the nation’s biggest retailer Tesco.
The supermarket chain posted falling sales for the crucial Christmas trading period and warned on the outlook for profits growth. In reaction, Tesco shares tumbled 15 per cent to 323.45 pence.
US stocks were mostly down on disappointing data on retail sales and jobless claims.
In midday trade the Dow Jones Industrial Average was down 0.28 per cent to 12,414.56 points and the broad-based S&P 500 dipped 0.17 per cent to 1,290.24 points, while and the tech-rich Nasdaq Composite bucked the trend to rise 0.09 per cent to 2,713.32 points.