Major European stock markets hit a soft patch yesterday despite news of successful Spanish bond auctions and after the ECB and Bank of England kept their main interest rates unchanged.
London’s benchmark FTSE 100 index of top companies closed virtually unchanged on the day at 5,827.78 points.
Frankfurt’s DAX 30 gave up 0.23 per cent to 7,305.21 points and in Paris the CAC 40 dipped by 0.14 per cent to 3,401.20.
French fund manager Renaud Murail at Barclays Bourse said that “the market is in wait-and-see mode, with very thin volumes in the past few days”.
Madrid’s IBEX 35 index was off by 0.18 per cent to 7,812.80 points, even as the debt-stricken Spanish Government met a key bond sale target by raising €3.99 billion at interest rates that were mostly lower.
On secondary sovereign debt markets, the Spanish 10-year bond changed hands at a rate of 5.896 per cent, up from 5.881 per cent on Wednesday.
In foreign exchange activity, the euro climbed to $1.3006 from $1.2903 late in New York on Wednesday. Gold prices firmed to $1,791.75 an ounce on the London Bullion Market from $1,775.25 an ounce on Wednesday.
The Bank of England and the European Central Bank both left their main lending rates unchanged yesterday at record lows of 0.50 per cent for the BoE and 0.75 per cent for the ECB.
ECB chief Mario Draghi lauded what he called “remarkable” progress made by Spain as the debt-wracked country reforms its labour market and banking sector.
He cited progress made on fiscal consolidation, structural reforms and the struggling banking sector but warned that “significant challenges remain ahead as well”.
Spain met a key bond sale target by raising €3.99 billion at interest rates that were mostly lower.
The Treasury, which aimed to borrow three to four billion euros, comfortably raised the funds in an auction of two-, three- and five-year bonds, proving it can still tap the markets for financing.
Analysts had expected Spain to formally ask for financial help within days after last week unveiling an austerity budget that was regarded as a precursor to a full bailout request.
Madrid is required to make a formal demand for help to trigger the release of eurozone rescue funds and supportive action from the European Central Bank.
Last month, Draghi vowed to ride to the aid of countries like Spain by buying unlimited volumes of bonds to drive down borrowing costs, sending markets soaring as investors saw a turning point in the crisis.
But the Bank of Spain warned yesterday the nation may miss its 2012 public deficit target and slip into a deeper-than-expected recession next year as pressure grows for a sovereign bailout.
In New York, meanwhile, US stocks were in positive territory for the most part in midday trading.
The blue-chip Dow Jones Industrial Average was up 0.48 per cent at 13,559.58 points.
The broad-based S&P 500 gained 0.47 per cent at 1,457.84 points, and the tech-rich Nasdaq Composite was flat at 3,134.68 points.
US markets “are enjoying a healthy rally following better than expected weekly jobless claims,” noted ETX Capital analyst Ishaq Siddiqi.
Asian markets mostly rose yesterday as investors cheered upbeat US economic data, but nagging concerns over Europe kept advances in check. (AFP)