European stocks fall
September 04, 2013 - 12:17:03 am
LONDON: European stocks fell in choppy trade yesterday as a US-Israeli missile test rattled nerves and raised expectations of Western military action in Syria.
At close, London’s FTSE 100 index dropped 0.58 percent to 6,468.41 points. Frankfurt’s DAX 30 fell 0.77 percent to 8,180.71 points and the CAC 40 in Paris sank 0.80 percent to 3,974.07 points.
European markets have had a slightly less exuberant air about them today after the strong gains of yesterday as nervousness about the situation in the Middle East spilled over on reports of two ballistic missiles being fired in the Mediterranean, caused markets to slump sharply in the morning session,” said Michael Hewson of CMC MArkets.
“Markets did regain their equilibrium somewhat after it was confirmed that it was a missile test by Israel but it was a timely reminder of the fluidity and uncertainty of the situation in the region, and kept investors on the back foot somewhat throughout the remainder of the day, despite some positive US economic data.”
On the foreign exchange markets, the euro fell to $1.3151 from $1.3192 late Monday. The US dollar firmed to 99.57 Japanese yen from 99.43 yen.
Early in the day, European equities had experienced flat trading as takeover activity in the telecoms sector was offset by investor caution before this week’s interest rate calls.
Finnish telecommunications group Nokia announced the sale of its mobile phone division to Microsoft for ¤5.44bn yesterday.
Tomorrow, investors will digest the latest interest rate decisions from the Bank of England and the European Central Bank.
“Investor confidence has been given a further boost with a pick-up in merger and acquisitions (M&A) activity, but with rate calls this week investors will be nervous of a swift change in sentiment on the back of the strengthening global recovery,” added McCudden.
Following the Microsoft announcement, Nokia’s share price soared as much as 45 percent. The stock closed at ¤4.19, up 33.49 percent, sending the Helsinki stock exchange up by 3.7 percent overall.
The Microsoft deal will bring and end to Nokia’s days as a phone maker. Nokia, once the darling of the mobile phone industry, has struggled to compete with smartphone market leaders Apple and Samsung.
Hargreaves Lansdown’s Richard Hunter said that US groups were eager to snap up assets. “It is often forgotten that, as a whole, the eurozone is the world’s second-largest economy,” he told AFP.
“The M&A activity has already been positively received,” he said adding that there was speculation about whether AT&T is also on the prowl. “Potentially it is a sign that, at last, companies are preparing to spend some of their cash piles on acquisitions.”
In London, Vodafone’s share price fell 5.02 percent to 202.50 pence on profit-taking, as investors digested the Verizon Wireless buyout. The vast $130bn deal — which would be one of the biggest transactions in corporate history — would allow Vodafone to bounce back from hefty losses, pay down debt, make new acquisitions and return money to shareholders, analysts said.
On Wall Street, the Dow Jones Industrial Average was up just 0.05 percent in midday trade, but the tech-heavy Nasdaq stayed well into positive territory, up 0.66 percent.