Europe stock markets dip before Fed update

Customers push shopping carts as they look for goods inside a Sainsbury’s supermarket store in Godalming, UK. Shares in Sainsbury’s dropped 2.4% to 360 pence yesterday after Britain’s second-biggest supermarket group announced mixed quarterly sales.AFP/LondonEuropean stock markets retreated yesterday, with investors booking profits ahead of an update from the US Federal Reserve and in reaction to eurozone unemployment data. Meanwhile the euro slipped as strong US jobs data heightened chances will continue with its cuts to its montly purchases of bonds. London’s benchmark FTSE 100 fell 0.50% to end the day at 6,721.78 points, while Frankfurt’s DAX 30 slid 0.09% to 9,497.84 points and the CAC 40 in Paris slipped 0.04% to 4,260.96 points. “Traders are playing it safe as they await the update from the Fed,” said David Madden, market analyst at IG traders. “Tonight’s minutes will give us an insight into why the US central bank decided to trim its bond-buying scheme, and we are likely to see low volumes and volatility until then.” Investors are awaiting the release of minutes from the Federal Reserve’s policy meeting to see if another cut in its stimulus could be on the cards, while closely watched jobs figures are due later in the week. The US central bank said at its last meeting that from January it would cut its bond-buying by $10bn a month to $75bn. US stocks were mixed yesterday as a strong report on US private-sector job growth created room for further Fed cuts. In midday trade, the Dow Jones Industrial Average fell 0.34% to 16,474.55 points, while the broad-based S&P 500 edged up 0.04% to 1,838.59 and the tech-rich Nasdaq Composite Index rose 0.37% to 4,168.50. The US private sector added 238,000 jobs in December, according to payroll firms ADP, well above the consensus estimate of 203,000. In the eurozone, unemployment continued near record highs in November at 12.1% but there were signs the bad times may be easing as the debt crisis peaks out, analysts said yesterday. They said other data, notably a sharp improvement in retail sales, suggest the economy could be holding its own again after a soft patch but progress would remain slow. The eurozone jobless rate came in at 12.1% in November, unchanged from October, while retail sales rose 1.4% by volume, more than reversing a fall of 0.4% in October, the Eurostat statistics agency said. In Britain, which is part of the European Union but not the eurozone, investors focused on Christmas trading updates. Shares in Sainsbury’s dropped 2.4% to 360 pence after Britain’s second-biggest supermarket group announced mixed quarterly sales. Sainsbury’s reported that a tough autumn gave way to a record Christmas period, highlighting shoppers’ tightening of budgets amid austerity. Shares in Mothercare, which sells products for babies and toddlers, crashed by 30.6% to close at 291.5 pence after the group shocked the market with a profits-warning. “Mothercare shares took an absolute caning ... after reporting a 4% drop in like for like sales in the most recent quarter, and reporting that it was likely to miss market expectations for full year profit,” said CMC Markets analyst Michael Hewson. In Paris, on the secondary SBF market, shares in French v