European stock markets posted gains amid light trading volumes yesterday, spurred by data that showed the US economy was pursuing its slow pace of recovery.
London’s benchmark FTSE 100 index of leading companies added just 0.03 per cent to 5,834.51 points, but Frankfurt’s DAX 30 rose by 0.71 per cent to 6,996.29 points after briefly breaking above 7,000 points in intraday trades for the first time since April.
In Paris the CAC 40 gained 0.91 per cent to 3,480.49 points, its highest level since March 26.
Milan climbed 1.87 per cent and Madrid leapt by 4.05 per cent in volatile trading that was exacerbated by very light volumes.
In foreign exchange deals, the European single currency rose to $1.2355 from $1.2285 late on Wednesday in New York.
“It is indeed a very quiet summer market, with volumes significantly down and trading struggling to gain traction,” said Gekko Global Markets sales trader Anita Paluch.
In New York, the release of US economic indicators also pushed stocks into positive territory, with the blue-chip Dow Jones Industrial Average gaining 0.34 per cent to 13,209.45 points in midday trading.
The broader S&P 500-stock index moved up 0.46 per cent to 1,411.97 points, while the tech-heavy Nasdaq index added 0.62 per cent to 3,049.83 points.
“It seems that investors are comfortable with building a degree of risk in anticipation of stimulus measures from the Fed and the ECB,” said ETX Capital analyst Ishaq Siddiqi in reference to the US Federal Reserve and the European Central Bank.
US data on new jobless claims and housing construction provided more evidence that the world’s biggest economy is growing steadily, though still at a slow pace.
Weekly numbers for new claims for unemployment insurance, an indicator of the pace of layoffs, came in as expected and in the same range of the past four months, while July data on new housing construction, although slightly down from June, gave a picture of an industry steadily picking up pace.
Unemployment claims numbers “point to improving conditions in the labour market as the four-week average of claims is only slightly higher than the low reading for March,” said RDQ Economics, adding the housing data “points to further improvement ahead for construction”.
Asian markets were mixed, meanwhile, with Tokyo the best performer as the yen weakened against the dollar on the dimming expectations of fresh monetary easing by the US Federal Reserve, which reduce the value of the greenback.
Tokyo rose 1.88 per cent, Sydney climbed 1.14 per cent and Seoul closed almost flat.
However, Hong Kong gave up its morning gains and slipped 0.45 per cent, while Shanghai shed 0.32 per cent in value.
Data released yesterday showed foreign direct investment in China fell 8.7 per cent in July, as the economy continues to feel the pinch of slowing global growth and the European debt crisis.
That, however, boosted investors expectations that Beijing will introduce new measures to kickstart the world’s number two economy, which has seen growth slow sharply in 2012.