LONDON (Dow Jones) – European shares were marginally lower Tuesday as investors decided to consolidate profits after a recent good run for European shares mixed after economic data knocked the confidence a tad.
German ZEW survey was worse than expected, the expectations index plunging in September to its worse level since February 2009. The decline in expectations of -4.3 to +14.0, went much further than the market expectations of a level 9.
However, assessing the current situation was positive, increased more than expected. And economists agree that the disappointing parts of the data is not the end of the German banks relative economic strength.
“Today the ZEW figures are not a harbinger of a double dip in Germany,” said Carsten Brzeski, economist at ING Bank NV. “The German economy is easing back the throttle.”
Investors seemed to be thinking the same and therefore the main markets were the equity from their lows, but float on the flat line.
By 1045 GMT, the Stoxx Europe 600 index was unchanged at 266.35, as the London FTSE 100 index at 5564.87. In Paris, the CAC-40 was 0.1% lower at 3765.14 and the DAX in Frankfurt was 0.1% lower at 6255.12.
The Dow Jones Industrial Average futures fell 0.1% in December 10466.0 and S & P 500 futures contract was down 0.1% at 1115.0, indicating a lower start for Wall Street.
In other economic news Tuesday, UK consumer price inflation remained elevated and above the Bank of England target of 2.0% for the eighth consecutive month in August.
Data from the Office for National Statistics showed that annual inflation was 3.1% last month, unchanged from July and than economists’ expectations of an interest rate of 3.0%. Although the FTSE hardly moved on the data, the pound sterling against the dollar ticked.
In terms of stocks, bank stocks nudged a touch, the Stoxx Europe 600 banks index up 0.1%. Investors were torn between consolidating gains Monday after the announcement of the new rules of Basel, and the expectations of a rotation back into the sector after leaving for over two years.
“Subject to a double dip, we think the funding will gradually return to normalcy. The sector looks cheap, we expect profitability to improve, and we believe that most institutional investors are still underweight – a combination of factors We strengthened our positive attitude, “said Evolution Securities.
Earlier Tuesday throughout Asia, stocks were mixed with investors finding support from a positive close on Wall Street, although cau-run Japan as the ruling party held a vote, eventually re-elected as Prime Minister Naoto Can.
South Korea Kospi Composite closed 0.2% lower, China’s Shanghai Composite Index closed 0.20 points higher at, while Hong Kong Hang Seng Index rose 0.2% and Japan’s Nikkei share average closed 0.2%.
“Since he (may) be seen as less likely to start intervention in the yen exchange rate than his opponent, Ichiro Ozawa, the yen appreciated against the dollar and euro after the news broke,” said Rabobank.
By 1100 GMT, the dollar was trading at Y83.25, Y83.71 against late in New York, after touching Y83.09 earlier, its lowest level since 31/5/1995.
Meanwhile, the euro was at $ 1.2836 against $ 1.2883, after underperforming the mixed ZEW survey, and the British pound was last seen at $ 1.5394, reinforced by the inflation landscape, but having previously declined to disappointing housing data from the Royal Institution of Chartered Surveyors.
Among other asset classes, spot gold was at $ 1,254 per troy ounce, up $ 8 from New York, while the October crude futures contract was down 57 cents at $ 76.61 per barrel.
The slightly weaker tone in the equity markets has helped to move money into the core of sovereign debt markets, and the December Bund futures contract was last 0.63 higher at 130.55 seen testing resistance in the zone 130 75.
Later Tuesday, August U.S. retail sales data in focus at 1230 GMT.
source:wsj
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