European stock markets closed narrowly mixed yesterday, with some investors preferring to take profits on recent gains as weak US retail sales figures, a key indicator, dented confidence, dealers said.
They said the sharp recovery last week, helped by strong results from US chip giant Intel, was always likely to be tested at some point, with the markets weighing generally poor data against stellar company earnings.
Dealers said the fact companies could be doing so well probably reflected the sharp restructuring they went through to cope with the global slump, making them better able to cope with headwinds now as the recovery slows.
The key issue is whether they will be able to continue to increase earnings if things get tougher still.
In London, the FTSE 100 index of leading shares closed down 0.33 per cent at 5,253.52 points. In Paris, the CAC 40 slipped 0.13 per cent to 3,622.98 points but in Frankfurt the DAX gained 0.30 per cent to 6,209.76 points.
Elsewhere in Europe, markets were mostly firmer as Amsterdam gained 0.38 per cent, Brussels was up 0.23 per cent, Madrid added 0.19 per cent, Milan fell 0.23 per cent and Swiss stocks rose 0.53 per cent.
Dealers said European markets did well on Tuesday anticipating Intel, which reported its best second-quarter results in its 42-year history but had little incentive to go further on Wednesday despite Asia’s sharp gains.
“With the strong gains of the last few sessions, it was always going to slow up a little,” said analyst James Hughes at CMC Markets.
“I also think that strong earnings are a little factored into this market at the moment,” Mr Hughes said.
“Unless we now see some huge earnings news, I do not think the market will jump for joy as it is mostly factored in,” he added.
ETX Capital trader Manoj Ladwa said that after the recent gains, investors would be hoping for just such a lead to sustain the advance.
“While the appetite for risk seems to be returning, the market will be looking to US firms to continue to report strongly in the coming days.”
In London, BP remained in the spotlight, falling 2.28 per cent after it delayed testing of a new cap installed on its Gulf of Mexico well which it was hoped would finally resolve the massive leak.
Dealers said news that US retail sales fell more than expected and for a second straight month in June hit sentiment, with consumer spending the major driver of the economy.