European stock markets closed lower in quiet trade yesterday as investors braced for a key US employment report later in the week for their next lead on the economic outlook, dealers said.
London was closed for a public holiday, adding to the subdued tone.
In Paris, the CAC 40 index lost 0.58 per cent to 3,487.01 points and in Frankfurt the DAX shed 0.65 per cent to 5,912.41 points.
Elsewhere in Europe, Amsterdam was down 0.47 per cent, Brussels lost 0.27 per cent, Madrid slipped 0.12 per cent, Milan fell 0.49 per cent but Swiss stocks bucked the trend, adding 0.36 per cent.
Dealers said strong gains of 1.65 per cent on Wall Street on Friday, driven by reassurances from Federal Reserve chief Ben Bernanke that he was ready to step in if the economy faltered again, helped steady nerves after recent losses.
Additionally, US second quarter growth was revised down to 1.6 per cent, rather than 1.4 per cent, from the previous estimate of 2.4 per cent.
The markets now have to get through to Friday’s US employment report, with job creation the single most important issue for whether the slowing economy falls back into recession or picks up speed again.
Mixed data yesterday on US consumer spending and earnings pointed overall to continued weakness on the employment front and so dampened Wall Street and the European markets.
Bertrand Lamielle, investment manager at B*Capital in Paris, said the market was going nowhere after finding some support in Friday’s revised US growth data.
Yesterday’s US figures provided no convincing lead, however, with investors waiting for Friday’s employment report to get a better fix on how the second half of the year is shaping up, Mr Lamielle said.
Dealers said mergers and acquisition activity continued to feature after Genzyme turned down an $18.5-billion offer from French pharmaceutical giant Sanofi-Aventis, with the prospect of a higher bid much discussed.
Sanofi-Aventis closed up 0.66 per cent.
“This operation is the most important step Sanofi has taken since its merger with Aventis,” said analyst Arsene Guekam of CM-CIC Securities. In New York, the blue-chip Dow Jones Industrial Average was down 0.73 per cent at around 1600 GMT and the tech-rich Nasdaq Composite fell 0.71 per cent.
Dealers said trade was likely to be volatile in the run-up to Friday’s US numbers, expected to show job losses of 118,000 in August and unemployment edging up to 9.6 per cent from 9.5 per cent.
Reflecting continued investor wariness, bond prices were higher again, with the yield – the rate of return – on the 10-year US Treasury bond falling to 2.596 per cent in midday trade from 2.652 per cent on Friday.