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European stocks retrench going into festive wind-down

by December 19, 2016 General
AFP/File / JOEL SAGET The dollar soared after the Fed raised borrowing costs and hinted at three more increases next year

European stocks and Wall Street were little changed Monday as investors retrenched after a strong run since the election of Donald Trump, with trading subdued heading into the festive period.

The dollar edged higher against the euro again, having soared last week after the Fed raised borrowing costs and hinted at three more increases next year, as it prepares for steeper price rises should Trump honour promises of US tax cuts and big infrastructure spending.

“As we run up to Christmas, with little corporate news, the expectation is that markets will remain relatively quiet,” Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

London was around 0.1 percent higher in mid-afternoon Europe, Frankfurt was flat and Paris slipped by 0.2 percent.

Wall Street opened a touch higher.

– ‘Pretty soporific’ –

Analysts at ING said they were looking forward to “a pretty soporific week”.

A closely-followed survey Monday showed that German businesses rounded off 2016 with a stronger-than-forecast increase in confidence, despite fears for the future over Brexit and Trump.

The Munich-based Ifo institute’s headline business confidence index hit 111.0 points in December, an increase of 0.6 points over November’s reading.

“December’s German Ifo survey suggests that the economy ended the year on a high note despite political upheaval elsewhere,” said Jennifer McKeown, chief European economist at Capital Economics.

In Paris, Danone shares fell 2.4 percent after the company downgraded its earnings guidance for 2016 because of weaker dairy sales.

In Milan, shares in the world’s oldest bank, Banca Monte dei Paschi di Siena, were down more than eight percent after the troubled lender launched its capital increase.

BP shares in London were up 0.6 percent after the company announced it had ramped up its presence in Africa with the purchase of stakes in gas projects in Mauritania and Senegal.

In Asia, Japan’s Nikkei stocks index closed Monday in negative territory, the first loss after nine successive gains.

It ended down 0.1 percent, with Nintendo diving more than seven percent as its new smartphone game Super Mario Run received tepid reviews, a far cry from the global phenomenon that was Pokemon Go earlier this year.

The firm’s shares fell more than four percent Friday.

“Investor expectations were very strong,” said Hideki Yasuda, an analyst at Ace Research Institute. “There are a lot of people writing on the App Store that Super Mario Run isn’t very fun. Perhaps expectations were too high.”

Hong Kong closed down 0.9 percent, Shanghai ended 0.2-percent lower and Singapore lost 0.8 percent, while Seoul slipped 0.2 percent. There were also sharp losses in Taipei, Jakarta and Manila.

However, Sydney added 0.5 percent as the government stuck to its plan to return the budget to surplus by 2021 and despite downgrading forecasts for economic growth, with fears growing it could lose its AAA credit rating.

– Key figures around 1435 GMT –

London – FTSE 100: UP 0.1 percent 7,017.32 points

Frankfurt – DAX 30: FLAT at 11,404.46

Paris – CAC 40: DOWN 0.2 percent at 4,821.56

EURO STOXX 50: DOWN 0.1 percent at 3,25526

New York – Dow: up 0.1 percent at 19,855.99

Tokyo – Nikkei 225: DOWN 0.1 percent at 19,391.60 (close)

Hong Kong – Hang Seng: DOWN 0.9 percent at 21,832.68 (close)

Shanghai – Composite: DOWN 0.2 percent at 3,118.08 (close)

Euro/dollar: DOWN at $1.0428 from $1.0450 Friday

Dollar/yen: DOWN at 117.12 yen from 117.98 yen

Pound/dollar: DOWN at $1.2373 from $1.2482

Oil – West Texas Intermediate: DOWN 9 cents at $52.86 per barrel

Oil – Brent North Sea: DOWN 28 at $54.93