European shares slide while euro edges up

European stock markets retreated yesterday, while the euro rose against the dollar, as investors wound down a week once more overtaken by Spanish debt strains and weak outlooks for the global economy.

London’s FTSE 100 index of top companies dropped 0.62 per cent to close at 5,793.32 points, while in Frankfurt the DAX 30 fell by 0.68 per cent to 7,232.49 points and in Paris the CAC 40 gave up 0.72 per cent to 3,389.08 points.

Milan dropped 0.78 per cent and Madrid fell 1.06 per cent.

In foreign exchange trading, the euro firmed to $1.2946 from $1.2926 late in New York on Thursday.

Gold prices dipped to $1,766.75 an ounce on the London Bullion Market from $1,769 an ounce on Thursday.

Shares failed to get much of a bounce from strong third quarter earnings reported by US banks JPMorgan Chase and Wells Fargo.

A surprise rise in the University of Michigan consumer sentiment index for October helped push Wall Street into positive territory in the morning, but the effect quickly wore off.

In midday trading, the Dow Jones Industrial Average was down 0.15 per cent to 13,306.36 point, while the S&P 500 dropped 0.37 per cent to 1,427.51 points, and the tech-rich Nasdaq gave up 0.25 per cent to 3,041.81 points.

JPMorgan shares were down 0.81 per cent despite handily beating forecasts with its $5.7 billion profit, up 34 per cent from a year earlier. Wells Fargo fell 3.24 per cent despite slightly surpassing expectations with a 22 per cent gain to a $4.9 billion net for the quarter.

“Today’s session has been rather like watching paint dry to be perfectly honest...” said Angus Campbell, head of market analysis at Capital Spreads.

“A big jump in consumer confidence across the pond attracted some buyers to lift us a little, but we’re yet to see any fully committed charge by the bulls,” he added.

The International Monetary Fund this week slashed its growth forecasts across the world, citing the festering debt crisis in Europe, a stuttering recovery in the US and a slowdown in China.

Adding to the worries is Spain’s continued refusal to ask for a bailout from international lenders despite the terrible state of its finances.

Hopes for the US economy were given a boost Thursday when the Labour Department said insurance benefits plunged unexpectedly last week to the lowest level since February 2008.

New jobless claims, a sign of the pace of layoffs, came in at 339,000 in the week to October 6, far below the previous week’s 369,000 and the then four-week average of 375,500.

Those figures come on top of data last week showing the unemployment rate had fallen to 7.8 per cent in September.

Asian stocks markets ended mixed yesterday as earlier gains from promising US jobs figures and hopes for upcoming Chinese economic data were offset by concerns over the global economy, dealers said.

Japanese shares were also hit by a plunge in telecom giant Softbank after it emerged it is eyeing a near $13 billion deal to buy Sprint Nextel of the US, in what would be one of Japan’s biggest ever overseas deals. (AFP)