European shares inched lower on Monday, with investors wary about placing large bets in the run-up to US economic data later in the week that could provide clues as to when the Federal Reserve might scale back its stimulus programme.
The FTSEurofirst 300 closed down 0.1 per cent at 1,282.93 points. The eurozone’s blue-chip Euro STOXX 50, meanwhile, ended 0.4 per cent lower at 3,022.04.
The FTSEurofirst 300 has been stuck in a holding pattern for the past week, with the U.S. government shutdown having halted the release of economic data in October, muddying the picture for investors looking for signs as to how the economy is faring.
Traders say the focus this week will fall squarely on US October data, namely ADP employment data tomorrow and ISM data on Friday.
“I would suspect people are still waiting for a bit more data to come out of the United States... before they start making any big decisions,” Lynnden Branigan, analyst at Barclays Capital, said.
“I think the market’s going to chop around on its side, with no real general direction for the time being but I think ultimately it will start to track higher,” he said.
He would need the Euro STOXX 50 to break through the October 22 high, at 3,056, for confirmation upside traction was taking hold, at which point he would target 3,077, the 2011 peak.
InterContinental Hotels Group came under pressure, off 2.3 per cent, on the back of softer US growth.
Among gainers, lock maker Assa Abloy and power company Aggreko climbed 3.8 per cent and six per cent respectively, as Assa Abloy posted third-quarter earnings ahead of market forecasts, while Aggreko reported a rise in underlying revenues and trading margins.
The Federal Open Market Committee is unlikely to shift policy at its meeting today and tomorrow as the Fed awaits more evidence on the impact of Washington’s recent budget battle on the US economy.
The FTSEurofirst 300 is just 0.7 per cent off a five-year high set this month, with the uncertainty caused by the US government shutdown and mixed economic data having fuelled a view the Fed will delay trimming its stimulus into next year.