European stock markets wilted yesterday in featureless trade while the euro fell against the dollar on brighter US employment data and fears for the health of debt-saddled eurozone members.
Gold surged past the $1,400 per ounce mark for the first time in a buoyant market boosted by speculative investors, reaching a new all-time high of $1,403.88 at 1720 GMT.
The gold price was driven up by the US Federal Reserve’s decision last week to carry out a $600-billion monetary stimulus measure aimed at reviving the US economy.
The move is seen in some circles as liable to aggravate inflation, against which gold is a traditional hedge.
Analysts said stock market investors in Europe, after last week’s gains, were treading water ahead of a key financial summit later in the week of the Group of 20 industrialised and emerging market countries.
Profit-taking was evident in early trade on Wall Street, where stocks weakened after markets in Asia closed mostly higher on a better-than-expected data last Friday on US job creation.
Hopes for a bounce in the US recovery were lifted further when the Labour Department reported that 151,000 new jobs were created in October, although unemployment was unchanged at 9.6 per cent for the third consecutive month.
The jobless rate matched expectations, while the number of new jobs was more than double the 60,000 forecast by most analysts.
In London the FTSE 100 index shed 0.43 per cent to close at 5,849.96 points while in Paris CAC 40 fell 0.07 per cent to 3,913.7 points. The Frankfurt DAX slipped 0.06 per cent to 6,750.50 points.
Elsewhere share prices fell 0.06 per cent in Amsterdam and 1.31 per cent in Madrid. Milan shares closed 0.16 per cent in positive territory.
“The market is looking for balance after all the statistics of last week,” said Yves Marcais of Global Equities.
Added another Paris trader, who asked not to be named: “Investors are catching their breath before the G20 on Thursday and Friday, even if nothing much is expected. But the trend should remain stronger.”
US stocks opened lower.
The blue-chip Dow Jones Industrial Average was down 0.47 per cent at 11,390.53 at mid-day while the tech-heavy Nasdaq composite index had fallen 0.07 per cent to 2,577.29.
Prices opened lower “as Wall Street bulls look to catch their breath and take some profit off the table following last week’s impressive run higher”, said Joseph Hargett of Schaeffer’s Investment Research.
Stocks last week soared to levels unseen since the September 2008 collapse of Lehman Brothers after the US Federal Reserve decided to inject $600 billion into the markets by mid-2011 in a bid to boost the economic recovery.
The Fed’s expected move, known as quantitative easing, had taken a heavy toll on the dollar in recent weeks, as the introduction of so much cash into the economy would tend to dilute the value of the greenback.
But yesterday, the dollar rose against the euro, reflecting concern for the fate of several debt-saddled eurozone governments, notably Portugal, Ireland and Greece.
The single currency in late-day trade was at $1.3911 against $1.4031 on Friday.
The dollar was meanwhile trading at ¥81.17 after ¥81.25 on Friday.
While Greek bond yields eased yesterday, the interest rate on Portuguese 10-year bonds rose to 6.579 per cent from 6.338 per cent on Friday, a higher interest suggesting investor concern.
The yield on 10-year Irish paper jumped to 7.646 per cent from 7.505 per cent on Friday. Bond prices and yields move in opposite directions.
Currency matters are likely to dominate the G20 summit amid growing fears of a global trade war.
The eurozone yesterday joined a chorus of criticism over the Fed’s quantitative easing, with the head of the bloc’s finance ministers insisting that the dollar was undervalued and warning that the Fed stimulus carried a risk of driving up global inflation.