EUROPEAN stock markets closed narrowly mixed overnight, consolidating sharp gains made the previous day on the back of strong corporate results led by the banks and better-than-expected US data.
Dealers said there was no surprise in some profit-taking given the strong advance yesterday but it was notable that sentiment - and Wall Street - held up well in face of largely disappointing US figures.
In contrast to stocks, the dollar was under pressure, falling through 1.32 against the euro on the view, highlighted byovernight data, that the US recovery is slowing.
Whether it is at risk of slipping back into recession remains the key issue, with most analysts at the moment believing it will not but fearful that it could, especially if unemployment continues to rise.
In London, the FTSE 100 index of leading shares was virtually unchanged at 5396.48 points. In Paris, the CAC 40 slipped 0.12 per cent to 3747.51 points but in Frankfurt the DAX gained 0.25 per cent to 6307.91 points.
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Michael Hewson, analyst at CMC Markets, said some "investors got a little nervous and decided to take profits.
"While earnings continue to come in on the positive side, economic data continues to disappoint and this makes it inviting to book profits in the short term."
Banks led by HSBC, which rose more than five per cent yesterday after stellar first half results, took the brunt of the selling pressure.
HSBC fell 1.26 per cent and Barclays shed 0.35 per cent.
Mr Hewson said US data - unexpected flat consumer spending and incomes in June; weak factory orders, down 1.2 per cent compared with forecasts for a fall of 0.5 per cent and a further drop in pending home sales - all contributed to unease over the US economic outlook.
Analysts said there was growing speculation the US Federal Reserve might have to take some additional stimulative action soon if the slowdown becomes more severe.
All eyes accordingly are on Friday's key US employment report - if new jobs are not being created fast enough to keep the recovery on track, markets could begin to get anxious, they said.
US Treasury Secretary Timothy Geithner meanwhile warnedovernight that the high US unemployment rate could get worse before it gets better.
Elsewhere in Europe, Amsterdam slipped 0.19 per cent, Brussels was up 0.37 per cent, Madrid rose 0.33 per cent, Milan slipped 0.23 per cent and Swiss stocks added 0.25 per cent.
In Asian trade overnight, Tokyo gained 1.29 per cent, Hong Kong added 0.21 per cent and Sydney rose 0.66 per cent.
Home construction fails to lift recoveryUS stocks drop on economic data worries
