European stock markets closed mixed yesterday, hit by news of slumping US and eurozone consumer confidence but London stood out, rallying sharply as investors played catch-up after a three-day weekend.
Paris and Frankfurt retreated early but came back after Wall Street reversed early losses in choppy trade there.
In London, the FTSE 100 of leading companies jumped 2.70 per cent to 5,268.66 points. In Paris, the CAC 40 edged up 0.18 per cent to 3,159.74 points but in Frankfurt the DAX dipped 0.46 per cent to 5,643.92 points.
Other European markets were similarly mixed.
In New York, the blue-chip Dow Jones Industrial Average was down 0.07 per cent at around 1615 GMT while the tech-heavy Nasdaq Composite rose 0.19 per cent.
Asian equities mostly rose for a second straight day yesterday, with Hong Kong up 1.71 per cent and Tokyo rising 1.16 per cent.
US consumer confidence plunged in August to the lowest level in more than two years on concerns over the economic outlook and the political stand-off over the nation’s debt, a key survey showed yesterday.
The Conference Board consumer confidence index tumbled almost 15 points from July to 44.5, the lowest reading since April 2009.
In Europe, eurozone consumer and business confidence also slumped in August, falling for the sixth consecutive month as Germany, Europe’s powerhouse economy, tanked, an EU survey showed.
The decline resulted from a “broad-based deterioration in sentiment across the sectors,” particularly in services, retail trade and among consumers, the European Commission said. Only the construction sector saw an improvement.
In reaction, the European single currency dived as low as $1.4385 but clawed its way back to $1.4436 after the US data, down from $1.4510 on Monday.
“The current level of the economic sentiment indicator... probably indicates that the recovery in the eurozone has come to a standstill,” said ING economist Peter Vanden Houte.
Economist Howard Archer at IHS Global Insight in London said: “It is evident that both businesses and consumers are very worried by the slowdown in domestic economic activity, heightened financial market turmoil, ongoing serious concerns over the eurozone sovereign debt situation and increased fears over the health of the global economy.”
At the same time, euro losses were limited by news of a successful government debt auction in Italy.
Italy yesterday raised €7.7 billion ($11.1 billion) via a bond issue but paid much lower rates that at the last similar sale in July, indicating an easing in investor jitters over Italian debt.
“This was a key litmus test for the third largest economy in the eurozone,” said Forex.com research director Kathleen Brooks.
Dealers said yesterday’s trade reflected some consolidation after sharp gains Monday, noting that business was very thin.
“The rebound on Monday was technical. The trading volumes were extremely weak as investors seriously lack conviction,” Frederic Rozier, equity manager at Meeschaert private banking in Paris said.