European stock markets climb

January 25, 2013 - 5:18:03 am

LONDON: European stock markets climbed yesterday and the euro gained against the dollar as traders welcomed positive economic data from China, the eurozone and the US, though Apple shares crumbled in midday trading on Wall Street.

London’s FTSE 100 index of top companies jumped by 1.09 percent to close at 6,264.91 points, Frankfurt’s DAX 30 added 0.53 percent to 7,748.13 points and in Paris the CAC 40 won 0.70 percent to 3,752.17.

“Even a further rise in Spanish unemployment to new record highs has not been enough to dampen the mood, while a surprise drop in US weekly jobless claims to their lowest levels in five years gave markets extra momentum in the afternoon session,” said Michael Hewson at CMC Markets.

In trading in New York, the Dow Jones Industrial Average was 0.67 percent higher, while the broad Standard & Poor’s 500 index had gained 0.37 percent.

The tech-heavy Nasdaq Composite was off by a slight 0.06 percent, though investors dumped Apple stock, which showed a loss of 10.34 percent to $460.86.

“A solid batch of US economic data and the passage of a vote to extend the deadline to raise federal debt had investors put aside Apple’s disappointing numbers this afternoon,” noted ETX Capital analyst Ishaq Siddiqi. Sterne Agee analyst Shaw Wu added: “We don’t think the Apple growth story is over but shares will likely languish until confidence is restored.”

Investors were disappointed by Apple’s profit and the forecast that its revenue for the current quarter would range from $41bn to $43bn and it would have a gross profit margin of 37.5 to 39.5 percent. “Apple’s profit did go up; it just didn’t go up that much,” said analyst Rob Enderle of Enderle Group in Silicon Valley.

“They had a really high increase in sales, but their high margin is coming apart at the edges and that is why investors are fleeing the stock,” the analyst continued. “They are making less per gadget.”

In foreign exchange trade, the European single currency climbed to $1.3375 from $1.3315 late on Wednesday in New York. On the London Bullion Market, gold prices dropped to $1,671 an ounce from $1,690.25.

In the eurozone, private business activity hit a 10-month high in January, according to a leading growth indicator released yesterday. The Purchasing Managers’ Index published by London-based Markit researchers, a survey of thousands of eurozone companies, logged 48.2 points in compared to 47.2 points the previous month.

“The fact that this PMI data were better than expected has been sufficient to give risk appetite another fillip,” said Jane Foley, senior currency strategist at Rabobank.

The IMF said on Wednesday that the global economy would grow slightly less in 2013 than it previously expected, held back by a weak eurozone that will stay mired in recession for a second straight year.

Asian stock markets closed mixed despite a positive overnight lead from Wall Street and news that Chinese manufacturing activity hit a two-year high in January, traders said. The yen retreated after a two-day rally as Japan logged a record trade deficit for last year with exports hit by the ongoing territorial spat with China and Europe’s long-running debt crisis.

AFP

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