LONDON: European stock markets rose slightly yesterday, as traders weighed higher inflation data in the US and signals from China that growth this year could be slower than forecast.
London’s FTSE 100 index of leading shares added just 0.02 percent to end at 6,544.94 points, Frankfurt’s DAX 30 rose 0.66 percent to 8,212.77 points and in Paris the CAC 40 increased 0.36 percent in value to 3,855.09 points.
“It would appear that comments from the Chinese finance minister that the world’s second biggest economy could well miss its growth target for this year have taken some of the edge off the exuberance of the last two days,” said Michael Hewson, Senior Market Analyst at CMC Markets UK.
However “core European equity markets continue to remain underpinned on the prospects for continued central bank support from the Federal Reserve,” he said.
Indices had risen on Thursday, including to record highs on Wall Street, after the Federal Reserve indicated that it was in no rush to end its huge programme for stimulating the US economy.
Federal Reserve head Ben Bernanke said on Wednesday that the US central bank’s stimulus drive would be kept in place “for the foreseeable future”.
But inflation news yesterday dented confidence that stimulus would be around for too much longer. US producer prices rose more than expected in June, the second straight month of increases led by higher energy costs, government data released showed.
The Labour Department said its producer price index rose 0.8 percent in June. The PPI index had climbed 0.5 percent in May after two months of declines. The news helped refire market expectations that the Fed would start to pull back on massive bond-buying later this year, which has sent global equity indices reeling in recent weeks.
China’s finance minister meanwhile said he expects the nation’s economy to grow seven percent this year, raising questions about whether it can achieve the official 7.5 percent target set four months ago.
“Our expected GDP growth rate this year is seven percent,” Lou Jiwei told reporters in Washington late on Thursday.
Lou’s remarks come as worries mount over China’s growth prospects following a slew of weak data on manufacturing and exports.
China is due to announce gross domestic (GDP) product figures for the second quarter on Monday. The median forecast in a survey of 10 economists by AFP was for GDP growth of 7.5 percent.
The euro fell to $1.3041 from $1.3092 late in New York on Thursday. The dollar grew to 99.44 yen from 98.90 yen. The price of gold dropped to $1,279.75 an ounce from $1,285 Thursday on the London Bullion Market.
Asian stock markets closed mixed yesterday. Japan’s Nikkei edged higher as traders bought back into the dollar following Bernanke’s comments and after the Dow and S&P 500 surged overnight to new highs on Wall Street.
But Wall Street was more subdued with the Dow Jone Industrial Average down 0.05 percent and the tech heavy Nasdaq off 0.11 percent.
AFP
