European markets fell yesterday in listless trading as hesitant investors, unsure of the direction of the world economy, stayed largely on the sidelines.
“It’s a classic case,” said one Paris trader.
“In the absence of any driving force investors tend to take profits, especially with the approach of the end of the month and quarter, and as there was no indicator likely to boost confidence in the economic situation.”
In London, the FTSE 100 index shed 0.17 per cent to close at 5,569.27 points while in Paris the CAC 40 lost 0.67 per cent at 3,737.12 points. The Frankfurt the DAX dropped 0.42 per cent to 6,246.92 points.
Elsewhere, Madrid fell 0.98 per cent, Amsterdam 0.69 per cent, Milan 0.82 per cent and the Swiss Market Index 0.36 per cent.
Sentiment in Europe also reflected a weak start on Wall Street, where the Dow Jones Industrial Average was down 0.28 per cent at midday, with the Nasdaq 0.29 per cent in negative territory.
With no economic indicators due, trade was cautious as investors continued to speculate on whether the US Federal Reserve would soon renew its crisis-era policies to buttress the ailing economy.
Speeches by two key Fed officials were to be closely watched to gauge the possibility of new quantitative easing – the injection of money into the economy.
Traders were also concerned about the continuing slide of the US dollar against key currencies in recent days, said Joseph Hargett, analyst at Schaeffer’s Research Investment.
“Wall Street is treading
cautiously... amid concerns about the falling US dollar, which has steadily pulled back to levels seen prior to the Bank of Japan’s intervention in the currencies market” earlier this month.
In London, banks dragged down the index following a report that a rescue by Ireland of one of its ailing lenders, Anglo Irish Bank, could cost more than €30 billion (41 billion dollars).
Barclay’s dropped 1.23 per cent, HSBC 1.59 per cent and RBS 0.33 per cent.
The Irish Times, without citing its source, said the final estimate for saving Anglo Irish would be “about 28 billion to 29 billion euros... rising well above €30 billion under a worst case or ‘stress’ scenario”.
A spokeswoman for the Irish finance ministry declined to comment on reports of the extra bailout funds.