The majority of the European markets fell into negative territory Tuesday afternoon, following the strong gains of the last few days. The markets had been mixed in early trade as disappointing earnings reports offset hopes of further stimulus from major central banks. There are expectations that the ECB will unveil new measures this week to drive down the cost of financing. Investors are also awaiting an announcement by the U.S. Federal Reserve on Wednesday and the all-important U.S. jobs report on Friday.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.45 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.56 percent.
The DAX of German rose by 0.15 percent, but the CAC 40 of France finished down by 0.87 percent. The FTSE 100 of the U.K. fell by 0.81 percent and the SMI of Switzerland decreased by 0.05 percent.
In Frankfurt, Bayer AG climbed by 1.57 percent. The chemicals and pharmaceuticals giant reported about a 34 percent decline in second-quarter profit, impacted mainly by special items, including certain litigation provisions.
Infineon Technologies surged by 7.16 percent, after the company announced spending cuts to cope with slowing chip demand.
In London, BP Plc dropped by 4.11 percent, after the oil giant reported a significant loss in its second quarter, hurt by $3.45 billion charges related to impairments and Gulf of Mexico oil spill.
Vedanta Resources rose by 5.77 percent, after the company reported significant growth in lead production and refined silver production at its operations in India for the first quarter ended June.
Xstrata Plc increased by 0.52 percent, after reporting a 7 percent rise in total mined copper production in the second quarter.
Unilever Plc gained 0.97 percent, after the company priced a 1 billion dollar bond issue on the U.S. market.
ITV Plc fell by 1.37 percent, after Deutsche Bank downgraded its rating on the stock to "Sell" from "Hold."
UBS sank by 6.13 percent in Zurich, after the Swiss banking giant reported a 58 percent fall in second-quarter profit and issued a cautious outlook, citing challenging market conditions.
The Eurozone unemployment rate remained unchanged at a record high in June, Eurostat reported Tuesday. The jobless rate for June was 11.2 percent, the same as seen in May. The rate matched economists' expectations.
Eurozone inflation remained stable in July as expected by economists, data published by Eurostat showed Tuesday. The annual rate came in at 2.4 percent, above the central bank's target of "below but close to 2 percent." The final data is due on August 16.
Unemployment in Germany increased for a fourth straight month in July as employers remained reluctant to hire more staff amid the intensified debt crisis in Eurozone and the uncertainty surrounding the economic prospects of the currency bloc.
The Federal Labor Agency said Tuesday that the number of unemployed rose by 7,000 in July from a month earlier to 2.89 million. This was in line with economists' forecasts and followed a similar increase in the previous month.
Germany's retail sales dropped unexpectedly in June from the prior month, data from the Federal Statistical Office revealed Tuesday. Retail turnover was down 0.1 percent from May, in contrast to a 0.5 percent rise expected by economists. Nonetheless, the rate of decline was slower than the 0.3 percent drop seen in May.
British consumer confidence remained at low level in July as hosting of Olympics failed to offset consumers' concerns about their personal and general economic situation. Market research agency GfK NOP said that the consumer confidence index was at -29 in July, unchanged from June and May.
France's producer prices increased less than economists expected in June, data released by statistical office Insee showed Tuesday. The producer price index for the domestic market increased 1.3 percent on an annual basis in June, notably slower than the 2.1 percent gain economists had forecast.
France's consumer spending increased at a slower-than-expected rate in June, data released by the statistical office INSEE revealed Tuesday. Household spending edged up 0.1 percent month-on-month, following a 0.5 percent gain in each of the previous two months. Economists were looking for a 0.2 percent increased.
In a report released Tuesday, the Commerce Department said personal income in the U.S. rose by $61.8 billion in June, an increase of 0.5 percent. The income growth was stronger than the 0.4 percent increase predicted by most economists and comes atop revised figures that showed income rose by 0.3 percent in May compared to the 0.2 percent initially reported.
However, consumer spending, known formally as personal consumption expenditures, fell marginally in June, dropping $1.3 billion. Because that decrease represents less than 0.1 percent, Commerce Department figures report it as essentially level. Most economists had predicted that June consumer spending figures would show at least a slight 0.1 percent increase.
Home prices in major U.S. metropolitan areas rose by more than anticipated in the month of May, according to a report released by Standard & Poor's on Tuesday. The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index rose by 2.2 percent in May following a 1.3 percent increase in April. Economists had expected the index to increase by 1.2 percent.
Chicago-area business activity unexpectedly expanded at a faster rate in the month of July, according to a report released by the Institute for Supply Management - Chicago on Tuesday. The ISM Chicago said its business barometer rose to 53.7 in July from 52.9 in June, with a reading above 50 indicating an increase in business activity. The modest increase by the business barometer came as a surprise to economists, who had expected the index to edge down to 52.5.
With consumers becoming more optimistic about the short-term outlook, the Conference Board released a report on Tuesday showing an unexpected improvement in consumer confidence in the month of July. The Conference Board said its consumer confidence index climbed to 65.9 in July from an upwardly revised 62.7 in June. Economists had expected the index to slip to 61.5 from the 62.0 originally reported for the previous month.
by RTT Staff Writer
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