European stocks slip as the temptation to consolidate gains
European stocks fell Tuesday on Profit-Taking, which may prove too tempting after the very positive start to the year’s trading globally.
In the European foreign exchanges, the dollar was weaker as investors looked ahead to Friday’s U.S. nonfarm payrolls data. The euro was trading at $1.4460, up from $1.4413 in late New York trading Monday. The dollar was quoted at ¥91.89, down from ¥92.51, and the British pound at $1.6143, up from $1.6085.
Suggestions from the Federal Reserve that U.S. interest rates will remain low for some time has helped to boost gains, with several of the main European indexes hitting new 52-week highs in the previous session.
The U.K. FTSE 100 index slipped 0.3% to 5485.15, Germany’s DAX Xetra fell 0.3% to 6029.96 and France’s CAC-40 index lost 0.4% to 3997.62.
Cadbury fell 1.7% in London after Kraft Foods sweetened the cash element of its bid for the U.K. confectioner after it sold its North American frozen pizza business to Nestlé for $3.7 billion.
Asian markets traded mostly higher Tuesday, bolstered by Wall Street’s strong start to 2010. Resources plays gained on stronger commodity prices, while technology shares were higher on optimism for chip sales this year.
Japan’s Nikkei 225 Index pared earlier gains but was still up 0.3% and Australia’s ASX/S&P 500 rose 1.0%. In Hong Kong, the Hang Seng index added 2.0%, while the mainland’s Shanghai Composite index added 1.1%. But South Korea’s Kospi Composite fell 0.3%.
Sentiment was brightened by the Dow Jones Industrial Average closing up 1.5% at 10,584.0 Monday, its highest close since Oct. 1, 2008.
The technology-heavy Nasdaq Composite rose 1.7% to 2308.4, its highest closing level since Sept. 3, 2009, and its biggest one-day gain since Nov. 9. The Standard & Poor’s 500 index also had its biggest one-day gain since Nov. 9. It added 1.6% to 1133.0, its highest close since Oct. 1, 2008. The stock gains came as the Institute for Supply Management unveiled a bigger-than-expected rise in manufacturing activity for December, boosting investor sentiment toward companies more sensitive to economic growth.
Dealers said that currency market participants are unlikely to make any aggressive moves ahead of the employment data, which are key in formulating a long-term investment strategy.
Spot gold was trading at $1127.30 per troy ounce, up $7.10 from the New York close, while the February contract for Nymex crude oil was up 33 cents at $81.84 per barrel.
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