The euro fell against the dollar yesterday after the release of upbeat US economic data while stocks were under pressure on news of Chinese monetary tightening and lingering eurozone debt worries.
European bond markets were calm, although the yield on Irish long-term debt edged higher after the International Monetary Fund said it would delay consideration of a rescue plan for Ireland until after parliament takes action on the proposed bailout.
In London the London FTSE 100 index gained 0.09 per cent to reach 5,812.95 points while in Paris the CAC 40 slipped just 0.02 per cent to 3,857.35. The Frankfurt, bolstered by advances in the auto sector, rose 0.60 per cent to 7,006.17 points.
Elsewhere in Europe, Milan fell 0.22 per cent, Madrid 0.63 per cent and the Swiss Market Index 0.28 per cent. Share prices in Amsterdam rose 0.24 per cent.
The vote on the European Union-IMF rescue package worth €85 billion for the financially troubled eurozone member worth €85 billion was set for next Wednesday.
Bond yields also rose on debt held by two other vulnerable eurozone states, Spain and Portugal.
The euro in late day trade was at $1.3227, down from 1.3239 late on Thursday.
The dollar was meanwhile trading at 83.92 yen, up from 83.70.
The single currency began the day in positive territory but later wobbled as the dollar gained strength after the Commerce Department reported that the US trade deficit narrowed more than expected in October to the smallest gap since January, thanks to a surge in exports underpinned by a weaker dollar.
The trade gap stood at a seasonally adjusted $38.7 billion, down 13 per cent from a revised $44.6 billion in September. “The trade balance report for October should certainly help ease the market’s fears about the US economy slipping back into recession,” said Patrick O’Hare of Briefing.com.
Confidence in the economic recovery was further bolstered after a survey released by the University of Michigan indicated a rise in consumer confidence in November.
But the optimism was dampened by worrying data from the world’s second-largest economy, China.
“Talk of Chinese inflation and a potential rate hike from Beijing could take center stage today, after the People’s Bank of China lifted the country’s bank reserve ratio once again,” said Joseph Hargett of Schaeffer’s Investment Research.
China’s central bank said yesterday it would raise the amount of money banks must keep in reserve as Beijing steps up efforts to contain inflation, rampant lending and soaring housing costs.
“The trend remains positive, despite rumours about bank shares – which are susceptible to a loss of confidence – and a resurgence in concern about sovereign European debt,” said Guillaume Garabedian of Meeschaert Gestion Privee.
Wall Street stocks were slightly higher at mid-day as the surprise narrowing in the US trade deficit and a rise in consumer confidence offset fears over China’s efforts to prevent its economy from overheating.
The Dow Jones Industrial Average was up 0.01 per cent at 11,370.63 while the tech-heavy Nasdaq had gained 0.17 per cent to reach 2,621.04.
Earlier in the day Asian stocks mostly slipped in cautious trade on expectation of China’s late-in-the-day step to cool the mainland economy and lingering concerns over eurozone sovereign debt.