European stocks wobble on eve of rate calls

GMT 14:53 2014 Wednesday ,04 June

Arab Today, arab today European stocks wobble on eve of rate calls

Investors were on edge
London - AFP

Europe's main stock markets wobbled on Wednesday, with caution prevailing on the eve of interest rate decisions in Britain and the eurozone, dealers said.
London's FTSE 100 index of top companies 0.26 percent to 6,818.63 points, taking a hit from poor quarterly earnings from Britain’s biggest retailer Tesco.
The CAC 40 in Paris slipped 0.06 percent to 4,501.00 points, but Frankfurt's DAX 30 added 0.07 percent to 9,926.67 points.
Milan slid 0.16 percent and gave up 0.20 percent.
"It was sour trading in Europe today with mixed services PMIs on the continent and weak US employment and trade data adding to a general unwillingness of traders to take big positions ahead of tomorrow’s ECB rate-setting meeting," said analyst Jasper Lawler at CMC Markets UK.
The European Central Bank is nearly universally expected to cut interest rates from already record lows in order to prevent the eurozone sliding into a bout of dangerous deflation.
Analysts are however divided about what other measures the ECB might take to support the economy, and many investors have been reluctant to take positions.
European stocks pushed down after the services purchasing managers index (PMI) compiled by data firm Markit showed the French economy still stagnating and raised concern about the potential impact of the Ukraine crisis on German companies that are highly dependant on exports.
The slid further after US payrolls company ADP said the US private sector added 179,000 new jobs in May, a drop of 36,000 from April and the lowest number in four months.
And the Commerce Department reported that the US trade deficit swelled 6.9 percent to $47.2 billion in April, much bigger than the 2.2 percent increase projected by analysts, which further damaged sentiment
However European and US stocks, which had fallen at the opening of trade, perked up after data showed that activity in the US services sector, the driver of the world's largest economy, surged in May.
The Institute for Supply Management (ISM) said its non-manufacturing purchasing managers index (PMI) rose to 56.3 in May from 55.2 in April, indicating accelerating growth. A number above a 50 reading indicates expansion.
In midday trade, the Dow Jones Industrial Average edged up 0.01 percent to 16,724.60 points.
The broad-based S&P 500 added 0.12 percent to 1,926.60, and the tech-rich Nasdaq Composite Index rose 0.33 percent to 4,247.88.
Asian equities mostly fell after two days of firm gains, as investors took their lead from Wall Street's retreat from record highs on Tuesday.
Hong Kong dropped 0.60 percent, Shanghai shed 0.66 percent and Sydney fell 0.64 percent. Seoul was closed for a public holiday.
But the Tokyo stock market added 0.22 percent, with sentiment supported by the weaker yen which boosts exporters.
- Tesco sales slump -
In European share action, Tesco saw its share price slump 1.3 percent to 293.5 pence after indications that the supermarket group had suffered its largest quarterly drop in domestic sales for four decades.
British sales excluding petrol in stores open at least a year sank 3.7 percent in its first quarter, or the three months to May, from a year earlier. That was the third successive quarterly drop.
Tesco, the world's third-biggest supermarket group, faces competition from German-owned discounters Aldi and Lidl, as well as from traditional supermarket rivals comprising Wal-Mart division Asda, Sainsbury's, William Morrison and Waitrose.
Meanwhile shares in French bank BNP Paribas rose 1.2 percent to 51.5 euros after President Francois Hollande said he planned to raise the issue of a looming US fine reported to be over $10 billion with his US counterpart Barack Obama when they meet later Wednesday.
In Paris, Hollande's office at the Elysee Palace also revealed that he had already written to Obama two months ago in defence of the bank against the "disproportionate" penalties being considered against BNP Paribas for having broke US sanctions against Iran, Sudan and Cuba between 2002 and 2009, and that the two presidents had discussed the matter since.
In foreign exchange deals on Wednesday, the euro slid to $1.3620, down from $1.3627 late in New York on Tuesday.
The European single currency slipped to 81.33 British pence from 81.36 pence.
The British pound weakened to $1.6746 from $1.6750 on Tuesday.
The price of gold rose to $1,245.25 an ounce from $1,242.75 Tuesday on the London Bullion Market.

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