Europe’s main stock markets were mostly flat in a choppy session yesterday, after data showed US home sales fell unexpectedly in February and the announcement of the British annual budget.
London’s FTSE 100 benchmark index of leading shares rose just 0.01 per cent to 5,891.95 points. In Frankfurt, the DAX 30 rose 0.23 per cent to end at 7,071.32 points, while in Paris the CAC 40 slipped 0.10 per cent to 3,527.37 points.
“The market is consolidating, with reduced volumes,” brokerage IG Markets said in a note.
The euro eased to $1.3206 from $1.3222 in New York late on Tuesday and the dollar firmed to 83.74 Japanese yen from 83.68 yen.
US stocks were also flat after the announcement that sales of previously owned homes, the biggest segment of the US housing market, had dipped in February.
The Dow Jones Industrial Average edged down 0.09 per cent to 13,157.70 points in afternoon trading, while the broad-market S&P 500 edged up 0.06 point to 1,406.36 points. The tech-rich Nasdaq Composite gained 0.39 per cent to 3,086.06 points.
Existing-home sales in the US slipped 0.9 per cent to a seasonally adjusted annual rate of 4.59 million units from an upwardly revised January reading.
But compared with the level a year ago, sales were up 8.8 percent amid depressed prices and easing unemployment, the National Association of Realtors trade group said in a statement.
“These indicators are not catastrophic, but the market needed to gain its breath after recent gains,” said Guillaume Garabedian at Meeschaert Private Banking in Paris.
Investors saw few surprises from British finance minister George Osborne who unveiled his third austerity budget, pledging the government’s “unwavering commitment to deal with Britain’s record debts.”
Mr Osborne slightly upgraded the government’s official 2012 economic growth forecast when he presented the budget with output expected to expand by 0.8 per cent this year, up from the previous growth forecast of 0.7 per cent that was given in November.
Chancellor of the Exchequer Osborne said that Britain remained on course to virtually wipe out its budget deficit by 2017, helping him to cut the country’s top rate of income tax from 50 per cent to 45 per cent.
“Today’s UK budget could be a bold move to stimulate growth via boosts to consumption and investment, especially the cut in corporation tax could attract more investment and make Britain a more competitive location for corporations,” Berenberg Bank Senior Economist Christian Schulz said.
“The risk is that the budget can be interpreted as a deviation from the austerity path, potentially endangering the UK’s AAA rating, leading to higher yields and rising deficits,” he added.
In a blow to the government ahead of the budget, official data showed that British public sector borrowing rose by more than expected in February to a record level for the month.
Public sector net borrowing increased by £15.2 billion (€18.16 billion) in February to reach £110 billion for the fiscal year to date.
Economists polled by Dow Jones Newswires had forecast much lower borrowing of £7.9 billion in February.