European equities mostly lost ground yesterday profit taking and shifting expectations that the US Federal Reserve would unveil more stimulus measures later this week, dealers said.
The London’s FTSE 100 index closed down 0.56 percent to 5,743.53 points and the Paris CAC 40 gave up 0.51 per cent to 3,413.89 points, while Frankfurt’s DAX 30 bucked the trend to end with a gain of 0.11 per cent to 7,010.57 points.
Madrid fell 0.37 per cent and Milan lost 0.33 per cent despite a debt auction in which Italy’s borrowing costs fell sharply.
The euro dipped to $1.2545, compared with $1.2566 late in New York on Tuesday, as the dollar picked up some support from an upward revision of second quarter growth.
The dollar rose against the yen, climbing to 78.72 yen from 78.49 yen late on Tuesday.
The euro has recently perked up from hopes that the European Central Bank could restart a bond-buying programme.
ECB head Mario Draghi wrote in an article for the German weekly Die Zeit that the ECB would always act within its mandate and ensure price stability, but that it might have to resort to exceptional measures.
“The ECB will do what is necessary to ensure price stability. It will remain independent. And it will always act within its mandate. Yet it should be understood that fulfilling our mandate sometimes requires us to go beyond standard monetary policy tools,” Mr Draghi said.
Meanwhile Italy raised €9.0 billion at a six-month debt sale, with the yield dropping to 1.585 per cent from 2.454 per cent in the previous auction on July 27. “Markets are in the process of recognising the successes” of Italy’s deficit cutting measures, said Prime Minister Mario Monti.
Meanwhile, Fed chief Ben Bernanke was due to address an annual gathering of central bankers in Jackson Hole, Wyoming, tomorrow, with markets hoping he will outline fresh plans to boost the world’s number one economy.
“Investors would rather sit this week out than get involved in the run-up to Bernanke’s speech at Jackson Hole,” said Mike McCudden, head of derivatives at online brokerage Interactive Investor.
“All the signs are there that he will announce additional policy easing but investors are not taking any chances.”
The euro was provided with some support by news that Draghi would not be at Jackson Hole, which stoked speculation a new round of bond buying was near.