European shares flat, supported by growth outlook

London Mon Feb 4, 2013 2:30pm IST

The German share price index DAX board is pictured at the German stock exchange in Frankfurt January 25, 2013. REUTERS/Lisi Niesner/Files

The German share price index DAX board is pictured at the German stock exchange in Frankfurt January 25, 2013.

Credit: Reuters/Lisi Niesner/Files

Related Topics

London (Reuters) - European shares edged up but the euro fell and German bonds trimmed their losses on Monday as a resurgence of worries about Europe undermined positive sentiment stemming from stronger U.S. and Chinese economic data.

However, the rising confidence in the global economic recovery underpinned oil and copper, although prices moved in narrow ranges at the start of a week which sees policy meeting by several major central banks and a summit of European leaders.

"We are now seeing a consistent story of moderate growth in the U.S. and China," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

The economic outlook brightened considerably last week after data showed U.S. factory activity quickened in January and hiring increased, and after a survey of euro zone business activity suggested the worst of the region's downturn may be over.

On Sunday China's official purchasing managers' index (PMI) for the increasingly important services sector posted a fourth-straight monthly rise in January, although its slim gain added to evidence that the global recovery is a modest one.

But Spain dampened the mood in Europe by reporting that its unemployment problems are worsening as a corruption scandal threatens to engulf Prime Minister Mariano Rajoy, with the opposition calling for his resignation.

"If Rajoy were really forced to resign, if we were to have new elections in Spain, that would not help the improvement we've seen in financial markets," Tobias Blattner, European economist at Daiwa Capital Markets said.

Ten-year Spanish government bond yields rose 11 basis points to 5.32 percent in early Monday trade.

The equivalent Italian yields also rose on concerns that a scandal involving a major domestic bank could boost support for the centre-right party led by former prime minister Silvio Berlusconi as election day approaches.

The German Bund future which had opened 53 ticks lower at 141.48, trimmed its losses to be only down 13 ticks.

The pan-European FTSEurofirst 300 index held near a 23-month high after a solid rally since the start of the year to be up 0.15 percent. London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX were flat to slightly lower.

Meanwhile the euro fell 0.3 percent to a day's low of $1.3602 after the Spanish jobs data was released, with bids cited at $1.3580 and $1.3600.

(Reporting by Richard Hubbard. Editing by David Stamp)


Economic Pulse


Banking Sector

Banking Sector

India's laggard state lenders face tough sell on capital raising plan.  Full Article 

Sterilisation Camps

Sterilisation Camps

Sterilisation targets remain in all but name, critics say.  Full Article 

OPEC Oil Talks

OPEC Oil Talks

Saudi, Russia pre-OPEC talks yield no oil output cut  Full Article 

Bird Flu Scare

Bird Flu Scare

India orders culling after bird flu outbreaks in Kerala.  Full Article 

Microsoft in China

Microsoft in China

Microsoft to pay China $140 million for 'tax evasion'   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage