LONDON: European stocks ended flat or down on Thursday with disappointing US data erasing gains made on hints from a European Central Bank council member about a possible eurozone interest rate cut.
Sentiment was also boosted after Germany’s parliament approved an international bailout package for stricken eurozone member Cyprus by a large majority, but rumours about a French bank running into trouble briefly sent markets sharply down.
At the end of an erratic session, London’s FTSE 100 index of leading companies closed essentially unchanged at 6,243.67 points, losing less than a point.
In Paris the CAC 40 also ended nearly flat at 3,599.36 points, but in Frankfurt the DAX 30 slid 0.39 percent to 7,473.73 points.
In foreign exchange activity, the European single currency firmed to $1.3075, from $1.3028 late in New York on Wednesday. Gold rose to $1,393.75 an ounce on the London Bullion Market from $1,392. It had Tuesday struck a two-year low at $1,321.95 on weaker-than-expected Chinese economic growth data.
“Europe’s markets initially had a slightly more stable tone today” on the German approval of the Cyprus bailout and a succesful Spanish bond auction, said CMC Markets UK analyst Michael Hewson.
“In the afternoon session however equity markets started to roll over on vague chatter that a French bank might be in trouble and this, in turn, sent banking stocks sharply lower,” he added. US stocks fell yesterday after data showed signs of slower growth ahead for the US economy, with traders zoning in on technical factors to anticipate the market’s next move. The S&P 500 briefly traded below its 50-day moving average for the first time this year, an indication that the market’s medium-term uptrend could be in peril after this week’s strong declines.
The level was also the floor of the trading range during the last month, making 1,543 a key technical support, according to Richard Ross, global technical strategist at Auerbach Grayson in New York. “A close below 1,540 will generate a ‘sell’ signal as we transition into this period of weak seasonality,” said Ross, noting that the S&P 500 has posted negative second quarters in the last three years. “The 50-day is the key.”
The Nasdaq 100 and the Russell 2000 indexes have both closed below their 50-day averages this week, adding to the overall technical pressure on the market.
The Dow Jones industrial average fell 37.11 points or 0.25 percent, to 14,581.48, the S&P 500 lost 4.91 points or 0.32 percent, to 1,547.1 and the Nasdaq Composite dropped 24.54 points or 0.77 percent, to 3,180.13.AFP
