European stock markets closed lower yesterday after weaker-than-expected US growth figures stirred concern about the strength of the economic recovery, dealers said.
The figures showed the US economy grew 2.4 per cent in the second quarter, short of forecasts for 2.5 per cent and down from a revised 3.7 per cent in the first.
They also showed that the recession was much deeper than previously thought and that a rise in demand boosted imports at the expense of domestic production, complicating the government's policy options.
Dealers said, however, that other data on consumer confidence and manufacturing in the Chicago area was better-than-expected, helping ease some nerves and allowing Wall Street to bounce back from a sharp opening fall.
Company results continued to be mostly positive.
In London, the London's FTSE 100 index of leading shares closed down 1.05 per cent at 5,258.02 points. In Paris, the CAC 40 fell 0.24 per cent to 3,643.14 points and in Frankfurt the DAX dropped 0.22 per cent to 6,147.97 points.
In Paris, Guillaume Garabedian of Meeschaert Gestion Privee said that "after the set-back of the US growth figures, investors perked up" on the consumer and Chicago manufacturing data, buying back in to limit the overall loss. Investors were hesitant, he added, torn between strong corporate results and concerns over the economic outlook, especially in the United States.
In London, Anthony Grech of IG Index said the US growth report came like a cold shower just when investors were thinking of buying.
"Today, just as traders looked ready to peer over the parapet, they have been shot down by the US data which has brought back yet another wave of risk aversion," Mr Grech said.
In New York, the blue-chip Dow Jones Industrial Average was down 0.12 per cent at around 1600 GMT, with the tech-rich Nasdaq Composite flat after a sharp early sell-off following what analysts said were disappointing growth figures.
"The US economic recovery continues but growth is soft and there are concerns about the durability of the expansion over the next few quarters," said Augustine Faucher, director of macroeconomics for Moody's Economy.com.
"Growth will remain weak until demand fundamentals start to improve towards the end of this year," he said.
Elsewhere in Europe, Amsterdam lost 0.45 per cent, Brussels was down 0.58 per cent, Madrid dropped 1.50 per cent, Milan shed 0.36 per cent and Swiss stocks were off 0.32 per cent.