European stock markets barely budged yesterday, with investors fretting over signs that vulnerable eurozone states again face sovereign debt pressure and news of a sharp fall in US consumer confidence.
Both Ireland and Spain were facing possible credit downgrades, the former from Standard & Poor’s and the latter from Moody’s.
Long-term yields on Irish sovereign debt shot up to their highest levels since mid-1997 on fears that a bailout of Anglo Irish Bank could prove to be costlier than had been feared.
The bailout could be more than €35 billion, S&P credit analyst Trevor Cullinan said, adding: “If that were to be the case then potentially then there would be further downward rating actions from Standard and Poor’s.”
Portugal, which along with Spain and Ireland is struggling to close a gaping public deficit, also saw its long-term yields rise to record high levels.
“Sovereign debt is rearing its ugly head again as concerns over Spain and Ireland weigh heavy on the market,” said ETX Capital trader Manoj Ladwa.
In London, the FTSE 100 index edged up 0.09 per cent at 5,578.44 points while in Paris the CAC 40 slipped 0.10 per cent to 3,762.35 points. The Frankfurt DAX dropped 0.05 per cent to 6,276.09 points.
Elsewhere there were declines of 0.25 per cent in Milan and 0.21 per cent in Madrid. The Swiss Market Index was unchanged while Amsterdam added 0.30 per cent.
US stocks struggled after a report showed US consumer confidence weakened in September, sparking new fears for the recovery of the world’s largest economy.
The previous day’s jittery trade continued after the key report by a private research firm said US consumers grew decidedly more pessimistic about the economic recovery, seeing worsening business and job market conditions.
The Conference Board, a business research firm, said its consumer confidence index dropped to 48.5 points from 53.2 in August, when sentiment had unexpectedly improved after two months of decline.
Most analysts had predicted the index would weaken slightly to 53 points.
Lynn Franco, research director at the firm, attributed September’s pull-back in confidence to “less favourable business and labour market conditions” that were coupled with a more pessimistic short-term outlook.
“Overall, consumers’ confidence in the state of the economy remains quite grim,” Franco said in a statement.
The blue-chip Dow Jones Industrial Average was up 0.02 per cent to 10,814.32 at mid-day while the tech-rich Nasdaq composite slipped 0.22 per cent to 2,364.62.
In Asian trade earlier, Tokyo fell 1.12 per cent as dealers kept an eye on Wednesday’s upcoming release of the Bank of Japan’s key Tankan survey of business confidence.
Sydney slipped 0.12 per cent, Hong Kong fell 1.03 per cent and Shanghai closed 0.63 per cent lower.