adminLONDON. — European stock markets steadied, with Frankfurt’s DAX index briefly breaking the 9 000 mark for the first time, last week, and Wall Street firmed.The euro fell from recent heights amid mixed regional economic data and weak earnings updates, traders said.
This came at the end of a week of solid gains for European indices and the single currency, won on the back of positive Chinese manufacturing data and expectations that the Federal Reserve will prolong its stimulus policy for a while longer.
In afternoon trading, Frankfurt’s DAX 30 rose 0,21 percent to stand at 8 999,45 points after briefly topping the 9 000 mark for the first time ever.
London’s benchmark FTSE 100 index rose 0,13 percent to 6 722,22 points and the CAC 40 in Paris shed 0,13 percent to 4 270,25.
Trading was subdued “. . . as major corporate earnings in the zone faltered and German IFO (business confidence) unexpectedly fell”, said CMC Markets trader Toby Morris.
Business confidence in Germany — Europe’s biggest economy — took a surprise fall in October after rising for the previous five months, data showed last week.
The Ifo index fell to 107,4 points from 107,7 in September and below the 108 points forecast by analysts polled by Dow Jones Newswires.
The European single currency reached a new two-year high at US$1,3823 in Asian trading hours before retreating in the wake of the German data.
It stood at US$1,3788 in London midday deals, which compared with US$1,3798 late in New York on Thursday. The dollar edged up to 97,30 yen from 97,29.
Britain’s pound slipped to at 1,1734 euros, while it dropped to US$1,6187. On the London Bullion Market, the price of gold slid to US$1 341,75 an ounce from US$1 344,75 on Thursday.
The euro has risen sharply in recent weeks due to disappointing economic data from the United States and has reached its highest levels since 2011.
The sharp fall of several emerging market currencies in August has also hit earnings and sales at multinationals.
“Across the range of firms missing revenue targets for the third quarter, one factor increasingly blamed is the impact of a higher euro,” said CMC Market’s Morris
“. . . Firms with an active client base in emerging economies are hit the hardest, with weaker currencies magnified in South America and India,” he added in a note to clients.
French electrical equipment group Schneider Electric warned that this was hurting business. The Paris-based company, a world leader in electrical engineering, said that currencies had depreciated by 10 to 20 percent against the euro over the summer.
“We find ourselves overvalued in relation to many currencies, including the dollar, that’s very clear,” Finance Director Emmanuel Babeau told AFP.
Its shares were down 3,3 percent to 61,16 euros in afternoon trading. But European Central Bank executive board member Joerg Asmussen said in an interview that he had no “specific concern” over the euro exchange rate, as the single currency rises against the dollar.
Separate data showed that Britain’s economy grew at the fastest rate for more than three years. Britain’s economy grew at the rate of 0,8 percent during the third quarter. — AFP.
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