European equities retreated yesterday as investors waited to see if US Federal Reserve chief Ben Bernanke would this week outline steps to boost the world’s biggest economy, dealers said.
Meanwhile the euro picked up as news that Mario Draghi would not attend the annual summit of central bank chiefs stoked speculation of a new ECB programme of buying bonds of indebted eurozone states is near.
London’s FTSE 100 closed down 0.02 per cent to 5,775.71 points, while Frankfurt’s DAX 30 dropped 0.64 per cent to 7,002.68 points and in Paris the CAC 40 fell 0.90 per cent to 3,431.55 points.
Spanish shares lost 0.88 per cent and Italian stocks slipped 0.13 per cent.
Sentiment in Madrid was hampered by news that Spain’s economy shrank by 0.4 per cent in the second quarter of 2012, extending the nation’s painful recession, and the Catalonia region requesting a €5-billion bailout from the central government.
In foreign exchange deals, the European single currency increased to $1.2561, compared with $1.2497 late in New York on Monday.
The dollar slipped against the yen, buying 78.50 yen against 78.74 yen late on Monday.
Investors were waiting to see what central bankers say about stimulus measures when they meet in Jackson Hole, Wyoming, with US Federal Reserve Chairman Ben Bernanke set for a key address on Friday.
“The almost absolute certainty displayed in recent price action that the Fed would ease at Jackson Hole this weekend seems to have petered out, with the major European indices pulling back further from their recent highs and entering a consolidative mode,” said CMC Markets senior market strategist Brenda Kelly.
Many traders had also been hoping for possible hints about the European Central Bank’s plans for a new programme to buy bonds of indebted eurozone states, but the ECB said yesterday that Mario Draghi will not attend.
That announcement prompted some euro demand, according to analysts at Barclays bank, with the reference to a heavy workload leading some some market players to believe some sort of ECB action may be imminent.
Financial markets are speculating that Draghi will unveil the details of the new programme at the ECB’s next policy meeting on September 6.
US stocks treaded water, with the Dow Jones Industrial Average slipping 0.05 per cent to 13,118.67 points in midday trading.