Monday, July 7, 2014 3:47 pm
LONDON (AFP) – Key European stock markets sank on Monday, marking a negative start to the week as investors booked profits and digested poor German economic data, dealers said.
London’s benchmark FTSE 100 index reversed 0.49 percent to 6,832.18 points in afternoon deals.
The Paris CAC 40 slid 0.99 percent to 4,424.81 points and Frankfurt’s DAX 30 lost 0.53 percent to 9,955.64 compared with Friday’s close.
In foreign exchange trade, the pound briefly struck a 2012 peak against the euro on the prospect of rising British interest rates early next year.
On Wall Street, stocks also took a hit from profit taking and the German numbers as traders returned from their long Independence Day weekend.
The Dow Jones Industrial Average was off by 0.36 percent at 17,006.79 points in initial trading, while the broad-based S&P 500 lost 0.30 percent to 1,979.54.
The tech-rich Nasdaq Composite Index declined 0.24 percent to 4,475.17 points.
“Shares are starting out the new trading week on a slightly negative note, with a combination of moderate profit-taking, lack of fresh impulses and somewhat disappointing German industrial production numbers putting pressure on stocks,” said Markus Huber at broker Peregrine & Black.
European equities had gained ground last week, with Germany’s DAX hitting a record high on surprisingly strong US jobs data and the retention of ultra-loose European Central Bank monetary policy.
– German data disappoints –
But on Monday, official data showed that German industrial output had contracted in May after being affected by the number of public holidays.
According to data compiled by the economy ministry, industrial production decreased by 1.8 percent, after slipping by 0.3 percent in April.
Activity was undermined by the number of public holidays and bridging days, the ministry explained.
“Data … has disappointed markets with German industrial output falling 1.8 percent between April and May, significantly below market expectations of no change,” Huber said.
“This reading from Germany is in line with the poor data reports out of the European powerhouse in recent weeks in areas such as unemployment data, business sentiment and factory orders.”
In company news, stock exchange operator Deutsche Boerse was the top faller in Frankfurt after receiving a broker downgrade from Credit Suisse.
The group’s share price slid 2.35 percent to 55.33 euros.
In London, SABMiller’s shares dropped 1.24 percent to 3,355,50 pence, despite news of a potential disposal.
The Britain-based brewer announced that it will seek to sell its $1.09-billion (800-million-euro) stake in South African leisure division Tsogo Sun.
SABMiller, which is listed in London and Johannesburg, said in a statement that after a strategic review it will dispose of its 39.6-percent stake in Tsogo Sun via a share placing and buyback.
The European single currency sank at one point to 79.15 British pence, a level last seen in September 2012. In afternoon deals, the single currency stood at 79.40 pence, up from 79.22 pence on Friday.
The pound meanwhile declined to $1.7118, down from $1.7160 late on Friday, when it had struck a six-year high point.
Elsewhere, the euro dipped to $1.3593 from $1.3595 late on Friday in New York.
On the London Bullion Market, the price of gold weakened to $1,313.25 an ounce from $1,319.25 on Friday.