European stock markets closed mixed yesterday as flat US jobs data and weak earnings from major banks offset any positive impact from the US Federal Reserve’s latest economic outlook.
Dealers said investors remain cautious over the strength of the US recovery while the European outlook is far from encouraging, making for choppy trade.
On Wednesday, the Fed said it would keep interest rates at super-low levels until at least 2014 and forecast the world’s biggest economy would grow more than first thought this year while unemployment would continue to fall.
Fed chairman Ben Bernanke warned that further stimulus would be “reckless” but added: “We would not hesitate to use them should the economy require that additional support.”
US new jobless claims figures yesterday were little changed, suggesting that the labour market improvement seen in the first quarter was on hold for now.
In London, the benchmark FTSE 100 index of top companies closed up 0.52 per cent at 5,748.72 points.
In Frankfurt, the DAX 30 gained 0.53 per cent to 6,739.90 points but in Paris the CAC 40 slipped 0.13 per cent to 3,229.32 points.
Milan lost 0.66 per cent after an Italian debt auction saw a spike in borrowing costs on six-month bonds and Madrid tumbled 1.29 per cent, hit by poor results from Santander, the giant lender.
In foreign exchange deals, the euro was firmer at $1.3232 from $1.3215 in New York late Wednesday.
In New York, shares were up after a hesitant opening, with the blue-chip Dow Jones Industrial Average rising 0.42 per cent at around 15.50 GMT while the broad-based S&P 500 gained 0.18 per cent and the tech-rich Nasdaq added 0.23 per cent.
Dealers said that with US new jobless claims at 388,000 for the week to April 21, compared to a revised 389,000 the previous week, there was cause for concern.
RDQ Economics was disappointed at the numbers but said it was important to keep recent increases in perspective, noting that the four-week average was in line with a slow improvement overall in labour market conditions.
In London, Angus Campbell of Capital Spreads said investors were “unsure as to whether the good corporate earnings season is enough to discount the overriding storm clouds that still shroud the macro picture.”
He said that overall, corporate results were positive but “our FTSE 100 benchmark index is not a barometer of our economy which continues to suffer.”
The banking sector took a hit following weak earnings from Spain’s Santander and Germany’s Deutsche Bank but investors found some positives in Barclays’ despite a bad headline figure.