EURO News: European stocks steadier after day of sharp losses

A view of screens displaying the evolution of the main index, the Ibex 35, and other stock figures at the stock exchange in Madrid, Spain, yesterday. The Madrid market dropped 0.95% in yesterday’s trading.

European stock markets slid modestly yesterday, following sharp losses suffered the previous day, failing to score gains despite positive data from Germany and the US.

London’s FTSE 100 index of leading shares shed 0.63% to 6,654.34 points, while in Frankfurt the Dax 30 index fell 0.56% to 8,305.32 points and in Paris the Cac 40 slid 0.26% to 3,956.79 points.

The Madrid market dropped 0.95% and Milan shed 0.65%.

After the drama of Thursday’s sell-off, trading was much calmer as investors weighed up whether the fall was the first phase of a much deeper correction still to come, said Matt Basi, head of UK sales trading at CMC Markets.

“Much stronger than expected measures on the German IFO business survey … weren’t enough to inspire a return to ‘buy the dip mode’ in Europe this morning as bulls took a more cautious approach, with speculation over an end to the Fed’s asset purchase programme back on the agenda,” he said in a broker note.

German business confidence rose unexpectedly in May, data showed yesterday.

The Ifo economic institute’s closely watched business climate index rose to 105.7 points in May from 104.4 points in April.

In Friday deals, the dollar slid to ¥100.98 from ¥101.82 late in New York on Thursday.

The euro, meanwhile, slipped to $1.2917 from $1.2935 on Thursday, when markets responded to talk from Federal Reserve chief Ben Bernanke that the US central bank could scale back stimulus measures.

“The euro has remained relatively stable against the US dollar over the past week, deriving support from tentative signs that the pace of economic recession in the eurozone is easing,” said Lee Hardman, analyst at The Bank of Tokyo-Mitsubishi UFJ in London.

On the London Bullion Market, the price of gold dropped to $1,390.25 an ounce from $1,408.50 on Thursday.

US stocks fell despite a rebound in US durable goods orders in April.

In midday trading, the Dow Jones Industrial Average was down 0.19% to 15,264.83 points, while the broad-based S&P 500 lost 0.32% to 1,645.19 and the tech-rich Nasdaq Composite fell 0.34% at 3,459.42.

Basi said the unexpected rise in US durable goods orders hurt share prices as it added “weight to the argument for a reduction in monetary stimulus from the Fed.”

Yesterday’s retreat in stock prices “is an example of the arm-wrestle that is likely to play out in the markets over the next few months as both sides of the stimulus debate make their case.”

Reported by: Caye Global News, Gulf Times/AFP London

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