Markets fall quiet amid weak data
European stocks crept lower today in light choppy trade as investors weighed up concerns over global economic growth with expectations of further central bank stimulus.
Mining stocks came under pressure as the global growth worries - exacerbated by data showing Japan's economy expanded just 0.3 per cent in the April-June period, half the pace expected - took their toll on the price of copper.
"The recent rally in equities appears to have run out of steam as Japanese data disappoints and the Olympic hangover kicks in," Mike McCudden, head of derivatives at Interactive Investor, said. "It's crunch time for action in the euro zone before stimulus hopes start to fade along with remaining confidence."
The FTSE Eurofirst 300 fell 0.1 per cent to 1,098.92 this morning, in volume at around 18 per cent of its 90-day daily average.
The index has surged 8 per cent since ECB president Mario Draghi raised hopes for fresh intervention two weeks ago when he said the bank was "ready to do whatever it takes to preserve the euro".
This has led to speculation the central bank would restart its purchases of Spanish and Italian debt to reduce their borrowing costs, although question marks remain over the timing and details of this aid.
"Based on the strong move we have seen I would guess this would lead to some kind of pause in equities although the downside is pretty much limited," Gerhard Schwarz, head of equity strategy at Baader Bank, said.
"Central bank action hopes to put some kind of floor (under equity markets). We have to see how quickly this materialises."
The weak Japanese GDP data came hard on the heels of poor trade data from China last week, which fuelled fears about the pace of the world's second-biggest economy and global demand.
Investors are however mindful that a gloomy economic outlook might lead to more central bank stimulus measures.
Julius Baer was the top FTSEurofirst 300 faller, off 5.2 per cent, as analysts criticised the Swiss private bank's $882 million purchase of Bank of America Merill Lynch's private banking business outside of the US
Analysts said the transaction looked pricey and questioned how it would add to Baer's earnings.
Trading volume in Julius Baer was strong, at twice the 90-day daily average.
Standard Chartered, meanwhile, advanced 1.4 per cent, extending its rally in the aftermath of sharp falls last week.
The British bank is rushing to reach a settlement within days over charges it hid transactions tied to Iran and is set to resume talks with US regulators today.
US stocks opened slightly lower today after six straight sessions of gains by the S&P 500 as Japan showed signs of economic weakness.
The Dow Jones industrial average was down 24.23 points, or 0.18 per cent, at 13,183.72.
The Standard & Poor's 500 Index was down 2.02 points, or 0.14 per cent, at 1,403.85.
The Nasdaq Composite Index was down 0.89 points, or 0.03 per cent, at 3,019.97.
Britain's FTSE 100 index was down 4 points, or 0.1 per cent, at 5,843.97 approaching lunchtime, edging further away from four-month highs hit on Thursday.
Volume was extremely low at 13 per cent of the 90-day average, driving volatility, albeit in a narrow range between 5,823.28 and 5,852.79 points.
Oil services firm Petrofac led fallers, shedding 5.6 per cent, having traded more than 80 per cent of its full-day average on concerns over contract delays as it reported first-half results.