AFP
European stocks diverged yesterday, with eurozone markets boosted by hopes of fresh stimulus from the ECB after weak inflation data, while the single currency hit a two-year low.
Frankfurt’s DAX index gained 0.55% compared with Monday’s close to end at 9,474.30 points and the Paris CAC 40 climbed 1.33% to 4,416.24 points.
Shares surged after news that annual eurozone inflation fell to 0.3% in September, the lowest for nearly five years, signalling that the European Central Bank may have to go even further to avert the threat of deflation.
The euro slumped to $1.2571, the lowest level since the start of September 2012.
“Markets in Europe and the US took weak global economic data as a positive for further central bank stimulus,” said Jasper Lawler, a market analyst at CMC Markets.
“The (US) Fed will end its quantitative easing program next month so markets are in search of an international money-printer to take its place and support the bull market.”
But London’s benchmark FTSE 100 index fell 0.36% to end the day at 6,622.72 points.
Britain’s economy grew more than expected in the second quarter, but expansion in the previous three months was more sluggish than previously thought, revised official figures showed.
Asian markets mostly slipped yesterday, with Hong Kong hit for a second day as a pro-democracy protest showed no signs of abating and a gauge of Chinese manufacturing came in below forecast.
But US stocks pushed higher, putting major benchmarks on track for quarterly gains, as eBay’s move to spin off its PayPal unit sent shares of the electronic commerce giant jumping more than 7%.
Wall Street had fallen earlier following data showing the consumer confidence index fell in August, dragged down by a lacklustre outlook for job availability.
In mid-afternoon trading, the Dow Jones Industrial Average stood at 17,115.70 points, up 0.26%.
The broad-based S&P 500 added 0.11% at 1,980.03 points, while the tech-rich Nasdaq Composite Index gained 0.16% to 4,512.88 points.
In Europe, all eyes were on the ECB ahead of its meeting tomorrow.
News that eurozone unemployment remained steady at a near-record 11.5% in August as economic growth stagnated and uncertainty over the Ukraine crisis and dealings with Russia weighed on businesses and helped to put more pressure on the euro.
“Although the exchange rate has already declined significantly since the spring... we suspect it will drop further as the monetary policies of the Fed and the ECB continue to diverge by more than widely envisaged,” said Capital Economics.
The euro later recovered slightly to stand at $1.2620, which compared with $1.2686 late on Monday in New York.
Against the British pound in later trading, the euro recovered to 77.81 pence, but still down from 78.11 pence on Monday. The pound fell to $1.6219 from $1.6241.
On the corporate front, shares in Airbus jumped 2.61% to 49.820 euros, as EU authorities gave the green light for its new long-haul A350 plane to enter service, opening the way for the first delivery to Qatar Airways.
Shares of British retailer Next dropped 3.79% after the clothing retailer said another month of warm weather could cut its full-year profit as shoppers delay updating their autumn wardrobes.
