European stocks rise despite grim news
European stock markets rose yesterday, unruffled by grim news on the eurozone and British economies.
London’s FTSE 100 index of leading companies closed up 0.39 per cent to 5,892.08 points, while Frankfurt’s DAX 30 added 0.26 per cent to 7,454.55 points, and in Paris the CAC 40 climbed 0.28 per cent to 3,590.50 points.
In foreign exchange deals, the euro dipped to $1.3076 from $1.3096 late in New York on Tuesday.
Gold prices eased lower to $1,694 an ounce on the London Bullion Market, from $1,697.75 on Tuesday.
“European markets started the day on a positive note on news that China’s policy of continued investment would continue under the new regime,” said Michael Hewson, Senior Market Analyst at CMC Markets UK.
“However some mixed European services PMI data kept a lid on investor enthusiasm as did some really poor European retail sales data which showed that European consumers remain reluctant to spend against a backdrop of austerity and uncertainty in mainland Europe,”he added.
The eurozone Purchasing Managers Index (PMI), a leading indicator compiled by the London-based Markit research firm, showed a upwardly revised score of 46.5 points for November.
Markit said the figure suggested the eurozone might be past the worst of its economic downturn, although recession was likely to continue into the beginning of next year.
Data from the European Union’s statistics agency Eurostat showed retail sales fell by 1.2 per cent in October from September, the third straight monthly decline and the largest since April.
Retail sales fell by 3.6 per cent compared with October 2011, marking the largest year-to-year drop since May 2009.
In New York, US stocks traded with investors tracking talks on avoiding the so-called fiscal liff of automatic tax hikes and spending cuts due to come into force on January 1.
In midday trade, the Dow Jones Industrial Average was up 0.87 per cent while the S&P 500-stock index had risen 0.44 per cent. The tech-rich Nasdaq Composite had slid 0.35 per cent, weighed down by market chatter about Apple’s profit outlook sent the company’s shares down 4.6 per cent.
Before the opening bell, payrolls firm ADP reported that US businesses added just 118,000 jobs in November, down from 157,000 in October.
A key report on the US economy’s huge services sector showed improvement. The Institute for Supply Management’s monthly index rose to 54.7, from 54.2 in October, roughly in the range it has held for a year.
In London, Britain’s finance minister George Osborne up-dated his budget plans and released revised government growth and debt forecasts.
He warned that the economy was expected to contract by 0.1 per cent this year owing to “deep-seated problems at home and abroad” before growing again in 2013, and added that deep austerity measures would be extended by a year to 2017-18.
The country’s debt as a proportion of gross domestic product (GDP) is now forecast to start falling in 2016-17, also a year later than the government’s previous forecast.