Europe directionless

Fri, 16 May 2008

Trading was sluggish and without direction on European stock exchanges on Thursday as investors appeared little moved by surprisingly positive eurozone growth figures.

In London the FTSE 100 index rose 0.58 percent to close at 6251.80, while in Paris the Cac 40 added just 0.04 percent to reach 5057.51. The Frankfurt Dax was likewise stable, slipping 0.03 percent to 7081.05 points.

The Euro Stoxx 50 index of leading eurozone shares slid 0.07 percent to 3854.86.

On Wall Street stocks posted modest gains in mid-day trade as Federal Reserve Chairperson Ben Bernanke warned that US financial markets were still fragile.

Bernanke, in a speech in Chicago, urged banks to boost their capital cushions and improve their risk management policies amid a lingering credit squeeze that has ended an era of easy credit.

The Dow Jones Industrial Average was up a 0.31 at 12 908.63 while the Nasdaq composite had risen 0.90 percent to 2519.11.

Commenting on the listless trend in Europe, a Paris trader said: "There was nothing to drive the market higher. The market needs a spark, a determining statistic to move higher."

Investors were evidently unmoved by news that the eurozone economy had burst out of the doldrums in the first quarter thanks to an astonishing boom in Germany.

The growth in the 15 countries sharing the euro hit 0.7 percent, an initial estimate from the European Union's Eurostat data agency showed, beating both economists' predictions and 0.4-percent growth registered in the last quarter of 2007.

The latest figure was boosted by quarterly growth of 1.5 percent in Germany, its highest rate for 12 years, which analysts attributed in part to mild January and February weather.

But private analysts counselled caution.

"Despite the positive surprise contained in today's numbers, it is important to realise that they are a look in the rear mirror.

"Going forward, we expect the euro area economy to slow," said Martin Luech of UBS, adding that the slowdown was not expected to hit rock-bottom until the second quarter.

In London Barclays Bank fell 1.99 percent to 418.75 pence after announcing a slide in first quarter net earnings. Elsewhere in the sector HBOS shed 1.06 percent to close at 465.25 pence.

Brewer SABMiller gained 3.91 percent to reach 1250 pence after reporting a 23 percent jump in net profit in its fiscal year ending in March.

In Paris construction and telecom group Bouygues added 4.10 percent to close at 50.95 euros on a 15 percent gain in first quarter sales.

Media giant Vivendi shot up 5.20 percent to 26.51 euros on better-than-expected quarterly results and on predictions its prospects were not likely to be hurt by a global economic slowdown.

Gaz de France was the day's main decliner, falling 1.93 percent to 42.70 euros in the wake of lower results reported by German energy giants EON and RWE.

RWE in Frankfurt fell 0.41 percent to 77.26 euros.

Elsewhere in Europe there were gains of 1.17 percent to 7683.43 on the Swiss Market Index and 0.31 percent to 489.9 on the AEX in Amsterdam.

There were declines of 0.11 percent to 34 233 on the SP/Mib in Milan, 0.01 percent to 14 186.4 on the Ibex-35 in Madrid and 0.85 percent to 3798.99 on the Bel-20 in Brussels.

Japanese share prices closed up 0.94 percent at a fresh four-month high after overnight gains on Wall Street and an upbeat earnings outlook from electronics giant Sony, dealers said.

The benchmark Nikkei-225 index closed at 14 251.74, the highest finish since 10 January.