European stocks closed mostly firmer yesterday, recovering some of the ground lost the previous day on hopes for progress in Greek debt talks after EU leaders agreed to rein in budget deficits.
Dealers said investors welcomed the EU summit commitment to abide by balanced budgets, which should ease fiscal pressures longer term, but continued wrangling over a Greek debt write-down means the crisis is still unresolved.
Without the write-down, a second Greek bailout package cannot go through, putting the country at very real risk of default in March when it must repay maturing debt.
Plunging profits at Spain’s Santander put the banks, some of which have posted very sharp recent gains, in the spotlight on a tentative day overall which saw markets come off afternoon highs.
In London, the FTSE 100 index of leading shares closed up 0.19 per cent to 5.681,61 points.
In Paris, the CAC-40 index gained 1.0 per cent to 3,298.55 points while in Frankfurt the DAX 30 added a modest 0.22 per cent at 6,548.91 points.
Milan gained 0.48 per cent as Madrid slipped a marginal 0.09 per cent.
In New York, stocks turned lower, giving up early modest gains after figures showed a fall in consumer confidence and continued weakness in home prices.
The blue-chip Dow Jones Industrial Average was down 0.58 per cent and the tech-heavy Nasdaq slipped 0.38 per cent at around 1705 GMT.
The Conference Board’s consumer confidence index fell to 61.1 in January from 64.8 in December.
“Consumers’ assessment of current business and labor market conditions turned more downbeat and is back to November 2011 levels,” said Lynn Franco of the Conference Board Consumer Research Centre.
“Regarding the short-term outlook, consumers are more upbeat about employment but less optimistic about business conditions and their income prospects.
The euro fell steadily through the day as the EU summit enthusiasm faded, with the unit at $1.3042 after $1.3134 in New York late Monday.
Analyst Ilya Spivak, analyst with FXCM in Paris, said the markets found some support from the EU summit on the agreement to balance budgets but with Greece still unfinished business, there was no appetite for taking too much risk.
The summit “failed to accomplish its most important target, that is to reduce the danger of a disorderly default” by Greece, Ms Spivak said.
“Greece continues to pull global market strings, with rumours of bad news forcing the markets down and rumours of good propelling the market higher,” said analyst Rebecca O’Keeffe at online brokerage Interactive Investor.
“Continued delays in these talks saw Europe slump (Monday) but comments from the Greek prime minister saying progress in the debt swap talks has been made, have sent European stocks higher.”
European Union president Herman Van Rompuy called for a deal between Greece and its bank creditors on a debt write-down plus the completion of a new €130 billion euro rescue package within a week.