AFP/London

European stock markets were mixed yesterday as investor enthusiasm waned over the US fiscal cliff deal that had sparked a rousing global rally on the first trading day of the year.
London’s benchmark FTSE 100 index of top companies added 0.33% to close at 6,047.34 points, while Frankfurt’s DAX 30 index dropped 0.29% to 7,756.44 points and the Paris CAC 40 fell 0.34% to 3,721.17 points.
All three indices had surged by more than 2% on Wednesday, in a bright start to 2013, after US lawmakers agreed a deal to avert the so-called fiscal cliff.
On Wall Street, stocks were also mixed in midday trading yesterday, with the Dow Jones Industrial Index down by a slight 0.06%, the broad-based S&P 500 up by 0.11% and the Nasdaq Composite adding just 0.05%.
Back in Europe, Madrid’s Ibex-35 index lost 0.52% but Milan’s FTSE Mib rose by 0.10%, one day after both key peripheral eurozone countries had soared by more than 3%.
While Democrats and Republicans in the US Congress reached a compromise, they also just delayed the imposition of spending cuts for two months, meaning another debilitating stand-off is almost certain at the end of February.
The rally on Wednesday was “overshadowed by concerns that US lawmakers have only kicked the can down the road like their European cousins have done through much of 2012,” ETX Capital analyst Ishaq Siddiqi noted.
At Capital Economics, Julian Jessop warned that given the “cantankerous” climate of the negotiations, there could be another stand-off leading to “a shutdown of the federal government” at the end of February or beginning of March.
Meanwhile, new claims for US unemployment insurance benefits rose slightly last week during the year-end holiday season, Labor Department data showed.
In foreign exchange activity, the euro fell to $1.3110 from $1.3184 late in New York on Wednesday, when it had struck a two week high at $1.3300. Gold prices declined to $1,679.50 an ounce on the London Bullion Market from $1,693.75. On secondary sovereign bond markets, 10-year debt issued by Spain traded at 5.026%, down from 5.037% on Wednesday, while the comparable Italian rates were 4.242%, down from 4.276%.
Global stocks began 2013 with a bang on Wednesday after Washington sealed a last-minute deal to avoid a combination of huge tax rises and spending cuts which would likely have pushed the US back into recession.
Now however, concern has shifted to efforts to lift the US debt ceiling at the end of February, with analysts warning that the country could see a repeat of a row in summer 2011 that saw Washington’s credit rating downgraded for the first time.