European stocks close lower

European stocks closed lower yesterday, with investors hesitant after recent gains on concerns over China and the eurozone and data showed the British economy in worse shape than first thought.

Dealers said the losses might reflect profit-taking following a strong start to the year but there have been some signs that the recent momentum has slowed.

At the same time, there remain concerns over the China and Europe outlooks and news that Britain’s economy contracted 0.3 per cent in the fourth quarter last year, after an original estimate of 0.2 per cent, hit sentiment.

A subdued opening on Wall Street after a weaker-than-expected durable goods orders report provided no lead, with investors wondering if the US Federal Reserve may need to take even more measures to boost the economy.

In London, the benchmark FTSE 100 index of top companies closed down 1.03 per cent at 5,808.99 points. In Frankfurt, the DAX 30 fell 1.13 per cent to 6,998.80 points and in Paris the CAC 40 lost 1.14 per cent to 3,430.15 points.

Milan, which had held up through most of the day in positive territory on the view Italy is making progress on stabilising its public finances, slipped 0.28 per cent.

In New York, stocks fell back, with the blue-chip Dow Jones Industrial Average down 0.34 percent and the tech-rich Nasdaq Composite off 0.46 per cent at around 1550 GMT.

Comments by Fed chief Ben Bernanke that record low interest rates will have to stay low for some time to come drove recent gains but they have also given some pause for thought about the underlying strength of the recovery.

A lower-than-expected rebound in durable goods orders in February from January’s surprise decline seemed to underscore concerns on the US economic outlook.

Initial orders for durable goods rose 2.2 per cent in February, reversing the revised 3.6 per cent dive in January, the Commerce Department reported.

The European single currency dropped to $1.3291 from $1.3315 in New York late on Tuesday,having been firmer for most of the day. The weak US performance and renewed concern over the outlook for China made for a soft day, said analyst Mike McCudden at online brokerage Interactive Investor.