European shares fall on weak US data

Europe’s main stock markets closed in the red on Thursday, weighed down by disappointing consumer spending data and a warning of future interest rate rises in the United States. Frankfurt's DAX 30 dropped 0.64 percent to 9,804.90 points, while the CAC 40 in Paris fell 0.47 percent to 4,439.63 points. London's FTSE 100 index of top companies closed effectively flat, gaining just 1.5 points to stand at 6,735,12. The euro fell to $1.3593, down from $1.3628 late in New York on Wednesday. A major drag on sentiment was the release of data showing that US consumer spending, which accounts for more than two-thirds of US economic output, rose a mere 0.2 percent in May after a flat April. This sent shares spiking sharply lower in the mid-afternoon in Europe, giving some direction to a trading session that had previously drifted aimlessly in the absence of major data releases. In foreign exchange deals, the British pound jumped to $1.7014 from $1.6982 on Wednesday, as the Bank of England tightened rules on home loans which the market saw as further evidence that it would soon also start to raise interest rates. The euro fell to 79.99 British pence from 80.24 pence. On the London Bullion Market, the price of gold dropped to $1,315 an ounce from $1,316.75 on Wednesday, according to AFP.