European stock markets wavered yesterday, with traders on edge amid heated speculation over a bailout for Spain and ahead of a policy meeting at the ECB.
At close, London’s FTSE 100 index of top companies was 0.28 per cent higher at 5,825.81 points, Frankfurt’s DAX 30 won 0.22 per cent to 7,322.08 points, while in Paris the CAC 40 fell by 0.24 per cent to 3,406.02 points.
In crisis hotspot Madrid, the IBEX 35 index lost 0.43 per cent to stand at 7,833.30 points.
Asian markets also traded mixed, with uncertainty over a bailout for struggling Spain keeping traders on tenterhooks.
“Investors were hesitant in an uncertain climate, marked by questions over Spain and awaiting the ECB meeting,” Xavier de Villepion of Global Equities.
US stocks meanwhile moved higher in midday trade yesterday after firm reports on services sector growth and private hiring for September.
The Institute for Supply Management’s services industry PMI showed the crucial sector picking up pace, but showed that hiring remained flat.
Payrolls company ADP’s private sector hiring report was better than expected, though at 162,000 jobs in September was still down by 14 per cent from August.
The blue-chip Dow Jones Industrial Average was up 0.28 per cent, the broad-based S&P 500 added 0.50 per cent, and the tech-rich Nasdaq Composite gained 0.55 per cent.
In foreign exchange trading, the euro slipped to $1.2915 from $1.2920 late in New York on Tuesday. Gold prices dipped to $1,775.25 an ounce on the London Bullion Market from $1,775.50 an ounce on Tuesday.
The eurozone’s sovereign debt crisis continued to weigh after Spanish Prime Minister Mariano Rajoy said on Tuesday that he was not planning to ask for a rescue package any time soon despite the parlous state of the country’s finances and its dangerously high borrowing costs.
“Rajoy ruled out an imminent Spanish bail-out yesterday evening, putting the brakes on the euro rally that had been underway in expectation of Spain seeking aid as early as this weekend,” said Currencies Direct analyst Alistair Cotton.
“It is highly likely that Spain will follow Greece, Portugal and Ireland in the very near future.”
Spain, the eurozone’s fourth-biggest economy, 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.
Analysts had expected Madrid to formally ask for help within days after last week unveiling an austerity budget widely seen as a pre-cursor to a request.
Dealers also eyed today’s upcoming interest rate decision from the European Central Bank.
“The ECB meeting on Thursday will be key for the euro in the short term as ECB head Mario Draghi is likely to be pressed for more details on the bond-purchase plan he announced last month and what conditions will be attached to the Spanish bail-out,” added Cotton.
Also on Wednesday, the London-based European Banking Authority (EBA) published its final report on the implementation of capital raising plans by the European Union’s biggest banks. The EBA said Europe’s major banks raised over €200 billion of fresh capital between December last year and June to cushion against future financial crises.
It said that 27 banks with an initial shortfall had strengthened their capital position by €116 billion in meeting a new requirement that top quality capital amount to nine per cent.