Economy Not Makers, European Stocks Flat

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Economy Not Makers, European Stocks Flat

Wednesday, 10 March 2010 10:22

London - European stocks ended the day with a few changes on Tuesday in cautious trading as uncertainty over economic prospects for Europe and poor corporate earnings reports, analysts said.
The main FTSE 100 index in London declined slightly 0.08 percent to 5602.30 points while in Paris the CAC 40 rose 0.17 percent to thin 3910.01 points and in Frankfurt the Dax index also rose slightly to 0.17 per cent 5885, 89 points.

"European markets closed flat on Tuesday as investors moved to reduce the scale of positions that have been built during the last four weeks of the increase in equity," said Giles Watts, head of equity trading at the firm City Index.

Elsewhere in Europe, Brussels rose 0.21 percent, Amsterdam rose 0.27 percent and Zurich rose 0.25 percent, but Madrid fell 0.68 percent.

Stoxx index of 50 major eurozone shares rose only 0.05 percent.

On Wall Street, the Dow Jones Industrial Average traded up 0.22 percent and the technology heavy Nasdaq index rose 0.51 percent in afternoon trading.

Tuesday stock investors looking for news driving the market in the absence of economic key data will be released early this week, analysts said.

"Prudence seems to hit the market as investors gave a pause after the stock rose in three of the last four weeks," said Patrick O'Hare, chief market analyst Briefing.com financial consultant based in Chicago.

Frederic Dickson of DA Davidson & Co., a U.S. investment firm, said: "We continue to believe that underlie today's market rally remains in place, but the day-to-day retreat is something a normal part of the bull market (excited) the long term.

"We expect investors to reduce equity exposure increased. This behavior is consistent with market psychology seen in the bull market expansion."

Ben Potter, an analyst at spread-betting firm IG Markets, pointed out that Tuesday was the first birthday when the global stock market began in March 2009 up from multi-year low in the depths of economic crisis.

"But with the volume slowed and Wall Street ended slightly varied, perhaps the temptation to leave the champagne on ice a little longer because of this recent rally ran out of steam," said Potter.

On March 9, 2009, the Tokyo stock market fell to a 26-year low and London reached a depth of six years under the 3500 points in the middle of the deepest economic slump since the 1930s. The market since then "rebound sharply.

A warning by rating agency Moody `s possible to lower the credit ratings of British banks since the withdrawal of the estimated measures of financial support for their tremendous help also from the rally in London.

"Because the British financial sector gradually emerged from the crisis of recent, extraordinary support that country's banking system has benefited, will probably gradually withdrawn," Moody `s said in a new report.

The agency says, because of phasing out the current support is assumed to "senior debt ratings and deposits of financial institutions and return to England a lower condition, the assumption of pre-crisis support.

"Each of ratings migration is expected to gradually," he added.

There is also continuing uncertainty about the economic fate of Europe because of difficulties with the Greek public finances and the diversity of European companies report increasing anxiety mood among investors.

EADS share price dropped 2.80 percent to 15.435 euros in Paris after the European aerospace giant reported big losses last year incurred to cover the running costs of the project and the A400M military aircraft superjumbo jet A380.

EADS released the results of only a few hours after withdrawing from the bid to build a giant tanker refueling aircraft for the U.S. Air Force.

Competitors from the U.S. Boeing is now ready to win a 35 billion dollar contract.

EADS in 2009 recorded a net loss of 763 million euros (1.04 billion dollars) after a net profit of 1.57 billion euros the previous year.

But in Frankfurt, Deutsche Post shares rose 2.23 percent to 13.09 euros after the German logistics giant is said in good condition for 2010 after a swing back to profit last year after big losses in 2008.

Deutsche Post, which has a courier service DHL, recorded a net profit of 644 million euros for 2009 after losing 1.7 billion euros the previous year, marked by a large devaluation of the assets of the company.

Earlier on Tuesday, Tokyo's Nikkei-225 index closed down 0.17 percent to 10,567.65 points - the highest ease of six weeks as investors took profits following a sluggish performance on Wall Street.

Investors cautious before China's economic data out on Thursday that could stoke nervousness about the steps further by Beijing to cool rapid economic growth, dealers said. | Antaranews.com | tenderoffer.biz |