European stocks close mixed after Ben Bernanke’s remarks
Europe’s main stock markets closed narrowly mixed yesterday, giving up modest early gains after US Federal Reserve Chairman Ben Bernanke gave a gloomy outlook on the US economy.
Dealers said the markets were firmer at the start on hopes that Bernanke, while giving an expected downbeat report to Congress, would also outline fresh stimulus measures for the flagging US economy.
By the European close, no such measures were forthcoming, disappointing investors here and in New York.
In London, the benchmark FTSE 100 index of top companies lost 0.59 per cent at 5,629.09 points.
In Frankfurt, the DAX 30 edged up 0.18 per cent to 6,577.64 points while in Paris the CAC 40 slipped 0.09 per cent to 3,176.97 points.
Madrid added 0.40 per cent but Milan lost 0.94 per cent.
In foreign exchange deals, the European single currency also reversed early gains, slipping to $1.2222 from $1.2271 in New York late Monday. The dollar rose to 79.04 Japanese yen from 78.83 yen.
In prepared testimony to Congress, Bernanke conceded that US economic data had been “disappointing” and that a future reduction in unemployment would likely prove “frustratingly slow”.
He also forecast slower growth for this year and next and painted a future replete with pitfalls both domestic and from Europe.
“Given that growth is projected to be not much above the rate needed to absorb new entrants into the labour force, the reduction in the unemployment rate seems likely to be frustratingly slow,” he said in his semi-annual testimony.
Weaker German investor confidence also weighed on sentiment, falling for the third month in a row in July as the eurozone debt crisis hurt exports, a new survey showed yesterday.
The ZEW think-tank’s economic expectations index declined by 2.7 points to minus 19.6 points, fanning concerns about the health of the eurozone’s biggest economy.
Markets were initially optimistic ahead of Bernanke’s appearance before the Senate Banking Committee, hoping for clear signs that the US central bank would offer a liquidity boost to the lagging US economy.
But Bernanke provided no such signals and US stocks erased earlier gains in late morning trade despite a spate of better-than-expected quarterly earnings from heavyweights such as Goldman Sachs, Johnson & Johnson and Coca-Cola.
At around 5.50 p.m., the Dow Jones Industrial Average was down 0.07 per cent while the tech-heavy Nasdaq shed 0.16 per cent, coming off their early lows.
Elsewhere, Asian shares gained ground yesterday, led by a sharp rise in Hong Kong, amid hopes of Chinese and US stimulus measures.
Hong Kong closed up 1.75 per cent, while the Shanghai Composite Index rose 0.62 per cent on bargain-hunting after hitting a three-year low on Monday.
Tokyo climbed 0.35 per cent, while Sydney rose 0.87 per cent.