US and euro stocks show modest gains in cautious markets
US and European stocks steadied on Wednesday after the European Central Bank announced it would lend less money to banks than previously expected, suggesting Europe's lenders were returning to health.
REUTERS - World stocks traded within a narrow range Wednesday as investors weighed fresh evidence that Europe’s banking sector was returning to health against another disappointing report about the U.S. job market.
On the downside, payroll company ADP said private employers added just 13,000 jobs in June. The weak figure follows a series of disappointing U.S. economic data showing slow and uneven recovery in the world’s largest economy.
The Dow Jones industrial average fell 13 points on the open before recovering to trade a few points higher.
European stocks, meanwhile, were buoyed by news that the European Central Bank will lend less money than expected for the next three months, suggesting banks’ cash needs are easing despite lingering worries about the eurozone debt crisis.
“The result of the ECB’s money market operations indicated that money markets have been less distorted than originally feared,” BNP Paribas said in a note.
Also providing a hopeful sign, Germany’s unemployment rate declined to 7.5 percent in June thanks not only to the traditional springtime upturn, but also an improving economy, according to the labor agency. The unadjusted jobless rate was down from 7.7 percent in May.
The FTSE 100 index of leading British shares was up 0.3 percent to 4,928.8. Germany’s DAX was higher by 0.38 percent to 5,974.67, while France’s CAC-40 was down by 0.09 percent to 3,429.98.
The Dow was up 1.74 points, or 0.2 percent, to 9,872 and Standard & Poor’s 500 was ahead by 2.43 points, or 0.23 percent, to 1,043.
The German data raised hopes that consumer spending in Europe’s biggest economy could help the region, where severe spending cuts have darkened the outlook.
However, a rate-setting member at the Bank of England warned Wednesday that austerity measures could push the British economy back into recession.
In Asia, major indexes closed down as concerns lingered about Chinese growth and lower-than-expected U.S. confidence for June all weighed during Tuesday trading as the trading year hit the mid-year point.
The second straight day of losses in Asia came after Wall Street slid overnight on news that U.S. consumer confidence dived in June, a worrisome sign for an economy driven by the spending of ordinary Americans.
The dour news about the world’s largest economy kept alarmed investors on the sidelines.
“Most investors are quite cautious and not willing to put their money back into the market,” said Castor Pang, director of research at Cinda International in Hong Kong.
He said a possible slowdown in China’s growth is also unnerving markets. Earlier this week, investor concern was heightened after an index that forecasts economic activity for China was revised lower.
While traders are seeing economic trouble wherever they look, Pang said he believes the market slide could be somewhat of an overreaction.
“The U.S. economy may not have bottomed out yet, but it has stabilized in the near term,” Pang said. “Maybe the U.S. markets are overreacting a little.”
But the U.S. and China are not alone in showing signs of stuttering recoveries.
Japan on Tuesday reported that moderating export demand had dented factory output in May while household spending fell and the jobless rate rose. Europe, meanwhile, is being rocked by protests against austerity measures meant to stabilize shaky government finances.
Japan’s Nikkei 225 stock average shed 2 percent to close at 9,382.64 and Hong Kong’s Hang Seng dropped 0.6 percent to 20,128.99.
South Korea’s Kospi lost 0.6 percent, Australia’s S&P/ASX 200 retreated 1 percent, and Taiwan’s benchmark was down 1.3 percent.
In New York on Tuesday, the Dow Jones industrials fell 2.7 percent to 9,870.30, its lowest close since June 9.The benchmark Standard & Poor’s 500 index dropped 3.1 percent to its lowest close since October.
Sentiment wilted on news that U.S. consumer confidence fell sharply this month because of worries about jobs and the overall economy. The Conference Board’s Consumer Confidence Index fell to 52.9 from a revised 62.7 in May, marking the steepest drop since February. Investors are also anxious as they wait for the U.S. Labor Department’s monthly employment report on Friday.
In currencies, the dollar rose to 88.64 yen from 88.49 yen late Tuesday.
The euro gained to $1.2216 from $1.2184.
Benchmark crude for August delivery was up 21 cents to $76.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.31, or 3 percent, to settle at $75.94 on Tuesday.