European markets soft heading into Easter break

By Pan Pylas

Associated Press

Published: Thursday, April 5 2012 10:20 a.m. MDT

A man walks in front of the electronic stock board of a securities firm showing Japan's Nikkei 225 index fallen 135.95 points to 9914.44 in Tokyo Wednesday, April 4, 2012. Asian stock markets on Wednesday followed Wall Street into negative territory after the Federal Reserve voiced concern about U.S. job growth but appeared to refrain from taking steps to prop up the economy. The Nikkei index briefly slipped to 9,886.34, its lowest level in a month. Markets in mainland China, Hong Kong and Taiwan were closed for public holidays.

Itsuo Inouye, Associated Press

Enlarge photo»

LONDON — European stock markets failed to hold on to their early gains Thursday as investors fretted about Spain's debt problems, and reduced their potential exposure to upcoming U.S. jobs figures in the run-up to the long Easter weekend. An uninspiring open in the U.S. did little to shake off the pre-holiday malaise.

A disappointing set of Spanish bond auctions on Wednesday contributed to a big rout on global stock markets alongside waning expectations of another monetary stimulus from the U.S. Federal Reserve.

Spain has become the latest point of concern in Europe's debt crisis as investors are concerned over the ability of the government to push through its big austerity program at a time when its economy is heading for a return to recession and unemployment is standing at around 23 percent. The yield on the country's 10-year bond pushed up to 5.74 percent, a sign that investors are wary of Spain's ability to avoid suffering the same bailout fate as Greece, Ireland and Portugal.

"The eurozone crisis remains unresolved and Spain remains in the spotlight with bond yields moving higher after yesterday's disappointing bond auction," said Neil MacKinnon, global macro strategist at VTB Capital.

Investors in Europe also have crucial U.S. jobs data on Friday on their minds. Though much of Europe is off for Good Friday, U.S. markets are open and the centerpiece during the session will be the monthly non-farm payrolls figures for March. Given that the payrolls data often set the market tone for a week or two after their release, investors are reining in their exposure.

In Europe, the FTSE 100 index of leading British shares closed up slightly at 5,723 while Germany's DAX fell 0.13 percent to 6,775. The CAC-40 in France was up 0.19 percent higher at 3,319. In the current risk-averse trading environment, the euro took a further knock, trading 0.6 percent lower at $1.3060.

On Wall Street, the Dow Jones industrial average was broadly flat, sown 0.04 per cent, at 13,070 while the broader S&P 500 index was up slightly, 0.02 percent, to 1,399.

Earlier in Asia, Japan's Nikkei 225 index slipped 0.5 percent to close at 9,767.61 while Hong Kong's Hang Seng fell 1 percent to 20,593. In mainland China, the mood was somewhat different, with the Shanghai Composite Index up 1.7 percent at 2,302.24 and the smaller Shenzhen Composite Index closing 3.1 percent higher to 919.42.

Oil prices recovered though after a recent steady decline over recent days as investors have worried about the global economic recovery and a jump in U.S. crude supplies — benchmark oil for May delivery was up $1.26 cents to $102.73 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.54 to finish at $101.47 a barrel in New York on Wednesday. It had not closed below $102 per barrel since Feb. 15.

Pamela Sampson in Bangkok contributed to this report.

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