Europe markets bruised by Fed, German data

Traders working at their desks in front of the DAX board at the Frankfurt Stock Exchange yesterday. The DAX 30 dipped 0.65% to 9,719.41 in yesterday’s trading.

AFP/London

European equities ended in the red yesterday after the head of the Federal Reserve warned it could raise rates faster than expected, adding to gloom over poor German data.

Paris’s CAC 40 fell 1.03% compared to Monday’s closing levels to settle at 4,305.31 points.

London’s FTSE 100 index lost 0.53% to close at 6,710.45 points while Frankfurt’s DAX 30 dipped 0.65% to 9,719.41.

Shares lost ground after Fed Chair Janet Yellen told Congress the improving US labour market meant the central bank could raise rates earlier than thought, pointing to high stock valuations.

The comments, which helped to push Wall Street into the red, added to gloom in Europe’s equity markets already digesting weaker-than-expected data from powerhouse Germany.

Investment sentiment in Germany fell to the lowest level for 19 months in July amid signs of a dent in activity in Europe’s top economy, a survey showed.

The widely watched investor confidence index calculated by the ZEW economic institute fell by 2.7 points to 27.1 points in July, its lowest level since December 2012.

The news adds to concerns that the eurozone is still facing the hangover of years of grinding debt crisis as a holding company behind Portugal’s biggest listed bank struggles to avoid bankruptcy.

In reaction, the European single currency dipped to $1.3580 from $1.3619 late in New York on Monday.

In mid-afternoon deals, the Dow Jones Industrial Average lost 0.28% to 17,007.35.

The broad-based S&P 500 dropped 0.49% to 1,967.37, while the tech-rich Nasdaq Composite Index lost 1.12% to 4,390.70.

US investment banking titan Goldman Sachs said earnings rose 4.7% to $1.95bn from a year ago thanks to big jumps in both equity and debt underwriting.

JPMorgan, the biggest US bank by assets, said earnings dropped 7.9% to $5.99bn compared with the second quarter last year.

Shares in European aircraft maker Airbus ended down 1.34%% despite news it has secured about $60bn of orders at the Farnborough airshow.

Imperial Tobacco dropped 3.69% after it agreed to buy cigarette brands including Salem and Winston from US tobacco giant Reynolds American for $7.1bn.

In Lisbon, shares in Portugal’s largest listed lender Banco Espirito Santo slumped for the seventh day on concerns that one of the bank’s holding companies is at risk of default.

The British pound weakened to $1.7158 from $1.7083 on Monday, as investors shrugged off a surprise jump in inflation. The euro eased to 79.14 pence from 79.71 pence.

In commodity deals, gold advanced to $1,310 per ounce from $1,306 on Monday.