European stock markets closed narrowly mixed yesterday ahead of a key US jobs report to give a lead on the US outlook amid growing controversy over how countries manage their currencies.
Dealers said much better-than-expected US new jobless claims figures helped sentiment but investors were unwilling to take any risks with Friday’s US September employment report looming.
At the same time, growing tensions on the forex markets, where the euro soared to fresh eight-month highs above 1.40 dollars, muddied the waters.
The European Commission warned that the rising euro could jeopardise recovery in the bloc just one day after Brussels urged China, without success, to let its yuan rise in value much more quickly.
The EU and the United States both say Beijing keeps the yuan undervalued to boost its exports at their expense.
In London, the benchmark FTSE 100 index of leading shares closed down 0.34 per cent to 5,662.13 points. In Paris, the CAC 40 index edged up 0.15 per cent to 3,770.47 points and in Frankfurt the DAX added a marginal 0.09 per cent to 6,276.25 points.
Dealers said decisions by the European Central Bank and Bank of England to leave record low interest rates on hold were as expected, with no new policy initiatives announced.
The prospect, however, is that the ECB may feel more confident in withdrawing stimulus measures given relatively solid economic growth while the BoE could instead put in more stimulus to keep the British recovery intact.
In Paris, one dealer said that while the US jobless claims figures were “not bad,” some of the detail of the report was less encouraging and that explained why investors largely kept to the sidelines.
An indifferent showing on Wall Street added to the muted tone.
In New York, the blue-chip Dow Jones Industrial Average was down 0.22 per cent at around 1600 GMT with the tech-rich Nasdaq composite index edging up 0.09 per cent.
The US market opened firmer on news that new claims for unemployment benefits dropped last week by more than two per cent to 445,000, surprising analysts who had expected a rise.
The figures can be volatile and dealers said investors were waiting for Friday’s employment report for confirmation of the improving trend.
Largely positive corporate results provided some support but Pepsico cast a shadow after it cut its earnings forecasts due to fluctuations in foreign exchange rates.
Aluminum giant Alcoa will be the first of the DJIA’s 30 component companies to report earnings when it releases results after the market closes.
Elsewhere in Europe, Amsterdam gained 0.21 per cent, Brussels fell 0.36 per cent, Madrid was up 0.37 per cent, Milan rose 0.60 per cent and Swiss stocks added 0.39 per cent.
In Asian trade earlier yesterday, Tokyo slipped 0.07 per cent and other markets were also little changed as investors waited for the US jobs report today.