European stocks close higher
Sunday, 31 August 2008
LONDON, Aug 30 (Agencies): European stock markets closed higher Friday, holding on to modest gains despite losses on Wall Street after US consumer spending figures dented hopes the economy was nearing recovery.
Dealers said Europe got off to a good start after Asian markets had built on New York's 1.76 per cent advance Thursday, believing that stronger-than-expected US growth figures reduced the threat of a recession.
On Friday, news that US consumer spending had cooled sharply and personal incomes fell in July checked sentiment, appearing to fit in with more cautious analyst comment that the second quarter US growth figures were misleading.
US personal incomes were down 0.7 per cent in July, the steepest drop since August 2005, while spending was up only 0.2 per cent.
Analysts said the latest figures suggested that overall third quarter growth could amount to only around 1.0 per cent, down sharply from the 3.3 per cent recorded in the three months to June which had boosted stocks Thursday.
Consumer spending is the key element in growth, accounting for about two-thirds of all activity in developed economies.
In London, the FTSE 100 index added 0.63 per cent at 5,636.60 points. In Paris, the CAC 40 rose 0.47 per cent to 4,482.60 points but in Frankfurt the DAX was virtually unchanged, inching up 0.03 per cent to 6,422.30 points.
The Euro Stoxx 50 index of leading eurozone companies gained 0.18 per cent.
On Wall Street, shares were lower after the consumer spending figures along with a disappointing earnings report from computer giant Dell prompted profit taking ahead of the Labour Day holiday weekend.
A jump in oil prices added to the selling pressure.
The Dow Jones Industrial Average was down 1.28 per cent at around 1615 GMT.
Economist Ian Shepherdson at High Frequency Economics said the spending data showed that a government stimulus package had run out of steam, leaving the outlook uncertain.
"With the tax refund effect on spending now more or less over, we think the worst is yet to come for consumers and we expect an outright decline in real third quarter consumption," he said.
In London, higher oil prices helped the energy majors, underpinning gains.
BP rose 1.24 per cent to 528.75 pence, Shell was up 0.75 per cent at 1,892 pence.
The banks were firmer, taking a lead from Germany where the expected sale of its Dresdner Bank unit by giant insurer Allianz was believed to point the way to a broader consolidation of the sector, dealers said.
HBOS gained 3.36 per cent to 315.75 pence and Royal Bank of Scotland put on 2.07 per cent to 234.75 pence.
Dealers said Europe got off to a good start after Asian markets had built on New York's 1.76 per cent advance Thursday, believing that stronger-than-expected US growth figures reduced the threat of a recession.
On Friday, news that US consumer spending had cooled sharply and personal incomes fell in July checked sentiment, appearing to fit in with more cautious analyst comment that the second quarter US growth figures were misleading.
US personal incomes were down 0.7 per cent in July, the steepest drop since August 2005, while spending was up only 0.2 per cent.
Analysts said the latest figures suggested that overall third quarter growth could amount to only around 1.0 per cent, down sharply from the 3.3 per cent recorded in the three months to June which had boosted stocks Thursday.
Consumer spending is the key element in growth, accounting for about two-thirds of all activity in developed economies.
In London, the FTSE 100 index added 0.63 per cent at 5,636.60 points. In Paris, the CAC 40 rose 0.47 per cent to 4,482.60 points but in Frankfurt the DAX was virtually unchanged, inching up 0.03 per cent to 6,422.30 points.
The Euro Stoxx 50 index of leading eurozone companies gained 0.18 per cent.
On Wall Street, shares were lower after the consumer spending figures along with a disappointing earnings report from computer giant Dell prompted profit taking ahead of the Labour Day holiday weekend.
A jump in oil prices added to the selling pressure.
The Dow Jones Industrial Average was down 1.28 per cent at around 1615 GMT.
Economist Ian Shepherdson at High Frequency Economics said the spending data showed that a government stimulus package had run out of steam, leaving the outlook uncertain.
"With the tax refund effect on spending now more or less over, we think the worst is yet to come for consumers and we expect an outright decline in real third quarter consumption," he said.
In London, higher oil prices helped the energy majors, underpinning gains.
BP rose 1.24 per cent to 528.75 pence, Shell was up 0.75 per cent at 1,892 pence.
The banks were firmer, taking a lead from Germany where the expected sale of its Dresdner Bank unit by giant insurer Allianz was believed to point the way to a broader consolidation of the sector, dealers said.
HBOS gained 3.36 per cent to 315.75 pence and Royal Bank of Scotland put on 2.07 per cent to 234.75 pence.