European stocks were little changed yesterday as investors pulled back after a strong run since the election of Donald Trump, with trading subdued heading into the festive period.
In London, the FTSE 100 up 0.1% to 7,017.16 points; Frankfurt — DAX 30 up 0.2% to 11,426.70 points and Paris — CAC 40 down 0.2% to 4,822.77 points at the close yesterday.
The dollar edged higher against the euro again, having soared last week after the Fed raised borrowing costs and hinted at three more increases next year, as it prepares for price rises should Trump honour promises of US tax cuts and big infrastructure spending.
“As we run up to Christmas, with little corporate news, the expectation is that markets will remain relatively quiet,” Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.
London closed 0.1 higher and Frankfurt added 0.2% while Paris lost 0.2%. Wall Street was a touch higher approaching midday in New York.
Analysts at ING said they were looking forward to “a pretty soporific week”.
A closely-followed survey yesterday showed German businesses rounded off 2016 with a stronger-than-forecast increase in confidence, despite fears for the future over Brexit and Trump.
The Munich-based Ifo institute’s headline business confidence index hit 111.0 points in December, up 0.6 points from November’s reading.
“December’s German Ifo survey suggests that the economy ended the year on a high note despite political upheaval elsewhere,” said Jennifer McKeown, chief European economist at Capital Economics.
Deutsche Bank shares closed 4.7% down following a report the bank could reach a deal this week with the US Department of Justice over a looming multi-billion-dollar fine.
The Reuters news agency quoted a source “with direct knowledge of the matter” as indicating that the bank was “set to pay far less” than the $14bn the United States has asked for.
In Paris, Danone shares fell 1.4% after the company downgraded its earnings guidance for 2016 because of weaker dairy sales.
In Milan, shares in the world’s oldest bank, Banca Monte dei Paschi di Siena, were down 10.8% on the first subscription day for a capital increase which the troubled lender hopes will help toward a total €5bn it needs to raise by the end of the month.
The bank’s chairman Alessandro Falciai, said that “everything is going according to plan”, but analysts said investor interest was cooler than it had hoped.
Michael Hewson, at CMC Markets, said the “continued weakness” of the Italian economy was probably the reason “why so far there has been so little investor interest”.
In Asia, Japan’s Nikkei stocks index closed yesterday in negative territory, the first loss after nine successive gains.
Hong Kong closed down 0.9%, Shanghai ended 0.2% lower and Singapore lost 0.8%, while Seoul slipped 0.2%.
There were also sharp losses in Taipei, Jakarta and Manila.
However, Sydney added 0.5% as the government stuck to its plan to return the budget to surplus by 2021 and despite downgrading forecasts for economic growth, with fears growing it could lose its AAA credit rating.


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