European stocks fall, pound boosted

GMT 15:29 2015 Thursday ,21 May

Arab Today, arab today European stocks fall, pound boosted

European stocks
London - AFP

European stocks fell Thursday after a largely downbeat session in Asia and Wall Street edging lower, with dealers uncertain over the exact timing of a hike in US interest rates.

But on the currency market, the British pound hit two-month highs against the euro on upbeat retail sales data.

In afternoon deals, London's benchmark FTSE 100 index was little changed down 0.01 percent to 7,006.31 points, with the British retail numbers trimming losses.

In the euro area, Frankfurt's DAX 30 lost 0.23 percent to 11,820.97 points and the CAC 40 in Paris slipped 0.05 percent to 5,130.93 points compared with Wednesday's close.

David Madden, market analyst at IG trading group, said "minutes from the Fed (meeting) left traders uneasy about an interest rate rise in the coming months".

He added: "June is off the radar but dealers were left in no uncertain terms that a rate hike is on the horizon. Broadly speaking, equity markets are relatively strong and traders are hesitant to buy in at these levels when a rate rise at the end of summer is looming."

Federal Reserve policymakers do not expect to increase its key interest rate in June, minutes from the April 28-29 policy meeting showed Wednesday.

A "few" officials thought that data collected by the June 16-17 meeting of the Federal Open Market Committee would likely show that the outlook had improved sufficiently to meet the central bank's thresholds for raising the near-zero federal funds rate.

But generally, the April minutes reflected a "wait-and-see" attitude after a stall in US economic growth in the first quarter.

In foreign exchange trading on Thursday, the euro rose to $1.1114 from $1.1096 late in New York on Wednesday.

The euro fell to a two-month low at 70.91 pence. It later recovered slightly to 70.93 pence but still down on Wednesday's value of 71.42 pence.

"The pound has been given another shot in the arm... by a surprisingly strong UK retail sales number," said Fawad Razaqzada, technical analyst at

"Against the euro, the pound has rallied to its best level since mid-March."

British retail sales rose far stronger than expected in April from the previous month, official data showed on Thursday, with customers profiting from falling prices.

Sales by volume jumped by 1.2 percent last month compared with March, the Office for National Statistics said in a statement. Analysts' consensus forecast had been for a gain of 0.4 percent after a fall in March.

With British inflation hitting negative territory, threatening deflation or a sustained period of falling prices, some analysts have warned that economic growth could be hit by consumers delaying purchases in the hope of further price falls.

But Scotiabank economist Alan Clarke said the latest retail sales figures point to the opposite happening.

"Deflation is not causing consumers to hold back and hope for a better bargain further down the road,"  Clarke said.

"Rather, consumers are spending the windfall from the reduced burden of food and energy bills."

Wall Street stocks fell in opening trade Thursday following news that CVS Health would acquire senior pharmacy services company Omnicare for $12.7 billion.

Five minutes into trade, the Dow Jones Industrial Average was down 0.08 percent at 18,270.55 points.

The broad-based S&P 500 slipped 0.03 percent to 2,125.12, while the tech-rich Nasdaq Composite Index dropped 0.05 percent to 5,069.03.


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