European stocks resist another Asia downturn

Markets in Europe broadly resisted another heavy tumble across Asia yesterday, closing only slightly lower, while US stocks modestly climbed as traders began to focus on the American earnings season rather than Chinese economic woes.
After flipping between ups and downs, European bourses closed moderately lower, but still pleasantly surprising analysts as they easily outperformed shares in China, which plunged around 5%, hard on the heels of last week’s rout.
James Hughes, chief market analyst of GKFX, said yesterday’s losses in Shanghai initially raised fears for European indices but “a remarkable unexpected and unexplained performance” by the region’s markets helped to “potentially stop the panic”.
London’s benchmark FTSE 100 index closed down 0.69%
compared with Friday’s close.
In the eurozone, Frankfurt’s DAX 30 closed slightly down by 0.25% and the Paris CAC 40 sagged 0.49%.
The euro fell to $1.0885.
After the worst opening week of any year on record for Wall Street, the Dow Jones Industrial Average was up 0.24% in the late European afternoon.
News of metals giant Alcoa’s more than $1.5bn contract with General Electric set a more upbeat tone after the Dow and S&P 500 both lost about 6% last week amid worries about falling oil prices and the slowing Chinese economy.
Analysts at Charles Schwab said stocks had started the new week “resiliently” even as key economic data loomed.
“Coming off one of the worst starts to a year, US stocks are rebounding somewhat in early action to begin the week, despite the continued sell-off in China and as crude oil prices remain under pressure,” they said in a note to investors.
JPMorgan Chase, Citigroup and Intel are among the companies on this week’s earnings horizon in the US.
In company news, shares in US biotech firm Baxalta rose after it accepted Dublin-based pharmaceutical group Shire’s $32bn cash-and-stock bid aimed at forming a global biotech giant targeting rare diseases.
Heavyweight Apple gained after the Financial Times reported its music streaming subscribers topped 10mn.
Oil prices continued their slump, with both main global contracts dropping yesterday. The slowdown in China - the world’s biggest energy user - further fuelled a decline sparked by a worldwide glut, weak demand and a strong dollar.
Worries about the global outlook pushed up the price of gold, which is considered a safe investment in times of uncertainty. The precious metal, which is up more than three% so far this year, bought $1,105 an ounce yesterday.