August 29, 2012
European equities have retreated as investors wait to see if US Federal Reserve chief Ben Bernanke will this week outline steps to boost the world's biggest economy, dealers say.
Meanwhile the euro picked up as news that Mario Draghi would not attend the annual summit of central bank chiefs stoked speculation of a new ECB program of buying bonds of indebted eurozone states is near.
London's FTSE 100 closed down 0.02 per cent to 5775.71 points, while Frankfurt's DAX 30 dropped 0.64 per cent to 7002.68 points and in Paris the CAC 40 fell 0.90 per cent to 3431.55 points.
Spanish shares lost 0.88 per cent and Italian stocks slipped 0.13 per cent.
Sentiment in Madrid was hampered by news that Spain's economy shrank by 0.4 per cent in the second quarter of 2012, extending the nation's painful recession, and the Catalonia region requesting a 5.0 billion euros ($A6.07 billion) bailout from the central government.
In foreign exchange deals, the European single currency increased to $1.2561, compared with $1.2497 late in New York on Monday.
The dollar slipped against the yen, buying 78.50 yen against 78.74 yen late on Monday.
Investors were waiting to see what central bankers say about stimulus measures when they meet in Jackson Hole, Wyoming, with US Federal Reserve Chairman Ben Bernanke set for a key address on Friday.
"The almost absolute certainty displayed in recent price action that the Fed would ease at Jackson Hole this weekend seems to have petered out, with the major European indices pulling back further from their recent highs and entering a consolidative mode," said CMC Markets Senior Market Strategist Brenda Kelly.
Many traders had also been hoping for possible hints about the European Central Bank's plans for a new program to buy bonds of indebted eurozone states, but the ECB said on Tuesday that Mario Draghi will not attend.
That announcement prompted some euro demand, according to analysts at Barclays bank, with the reference to a heavy workload leading some some market players to believe some sort of ECB action may be imminent.
Financial markets are speculating that Draghi will unveil the details of the new program at the ECB's next policy meeting on September 6.
US stocks treaded water, with the Dow Jones Industrial Average slipping 0.05 per cent to 13,118.67 points in midday trading.
The broad-based S&P 500 dipped 0.01 per cent to 1410.27 points, while the tech-rich Nasdaq added 0.03 per cent to 3074.13 points.
Asian shares were mixed on Tuesday amid stubborn fears about the eurozone debt crisis and a slowdown in China.
Shanghai jumped 0.85 per cent and Sydney gained 0.36 per cent, while Hong Kong edged up 0.07 per cent.
But Tokyo fell 0.57 per cent after the Japanese government cut its view of the world's third largest economy in August for the first time in 10 months.
"While the lack of confidence in the macroeconomic outlook stressed by the recent cut of the forecast by Japan highlights the fact that the global growth remains a real concern, a rather quiet economic calendar keeps the debt crisis in focus of investors," said Gekko Global Markets trader Anita Paluch.
"Markets are trading lower, but the landscape does not look so terrible as investors are adopting this wait-and-see attitude before Bernanke's speech."