GLOBAL MARKETS: European Stocks Flat; Data To Set Direction

GLOBAL MARKETS: European Stocks Flat; Data To Set Direction

By Ishaq Siddiqi
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--European stock markets have floated around the flat-line Wednesday, with investors dissecting the latest corporate results for clues about the extent of the economic recovery. "The market is pausing for breath, awaiting further direction. Traders have taken money off the table but are poised to get back in if the market breaks one way or the other," said Manoj Ladwa, trader at ETX Capital. At 0830 GMT, the Dow Jones Stoxx 600 index was up 0.1% at 228.10, while London's FTSE 100 index was down 0.2% to 4565.51, Frankfurt's DAX index was down 0.4% at 5395.7, and the CAC-40 index in Paris was 0.1% higher at 3482.7. The next few days are likely to be important in terms of giving the market a guide to the next direction, given the key economic data pieces scheduled for release. The U.S. ADP employment data Wednesday at 1215 GMT will offer a gauge at the current state of the U.S. labor market ahead of Friday's key U.S. nonfarm payrolls figure for July . "A less downbeat ADP employment survey could temper profit-taking in stocks ahead of nonfarm payrolls," said Kenneth Broux, market economist at Lloyds Banking Group. Also, Thursday's main economic agenda will be set around the policy meetings by the Bank of England and European Central Bank. "If these (data pieces) are all benign and we continue to get good earnings results then I think the market will continue its upward trend," added Ladwa. And there is no denying that there is value in the market, said Owen Ireland, sales broker at ODL Securities, "but many investors need to be aware that the markets have recovered eerily quickly considering the quagmire we were in less than a year ago." On the corporate front, banking stocks were in vogue again following earnings from France's Societe Generale SA (GLE.FR) and the U.K's Lloyds Banking Group PLC (LYG). Societe Generale returned to profit in the second quarter as revenues almost doubled at its corporate and investment banking unit. But Lloyds Banking Group reported that loan impairments rose more than five-fold in the first six months of the year. Still, shares in Lloyds pushed 5.6% higher, after it said it expected loan impairment charges to come down significantly from GBP13.4 billion in the first half. Shares in Societe Generale shares were 5.1% higher, and the pan-European Dow Jones Stoxx 600 banks index added 0.9%. On Wall Street Tuesday, the Dow Jones Industrial Average increased 33.63 points, or 0.4%, to 9320.19, marking its fourth straight day higher and the Standard & Poor's 500 tacked on 3.02, or 0.3%, to 1005.65. Still, Asian stock markets edged lower Wednesday with investors wary about whether recent upwards momentum can be sustained. Japan's Nikkei 225 closed 1.2% lower, South Korea's Kospi Composite ended down 0.4% and the Hang Seng index in Hong Kong closed 1.4% lower. "Players are worried that markets are becoming increasingly immune to positive cues, while any negative cues may trigger profit-taking," said Investrust CEO Hiroyuki Fukunaga. In foreign exchange markets, investors seemed to continue the previous session's trend of profit taking amid subdued equities, said Ashley Davies at UBS, and "the EUR/USD pair has hugged the $1.4400 level fairly precariously." At 0910 GMT, the euro stood at $1.4387, while sterling stood at $1.6981. The dollar traded at Y95.16. Elsewhere, spot gold was trading at $963.50 per troy ounce, around $2 below its close in New York. The front-month September Nymex crude oil futures contract was also a touch lower as trading entered a lull ahead of data expected to show a growing oil surplus. At 0910 GMT, the contract stood 43 cents lower at $70.99 a barrel on Globex, after settling at $71.42 a barrel, down 16 cents. Analysts expect oil inventories to rise by 500,000 barrels in the week ended July 31, while distillate stocks are seen increasing by 900,000 barrels, according to a Dow Jones Newswires survey, with the data from the U.S. Department of Energy due at 1430 GMT. Meanwhile, European government bonds are marginally weaker Wednesday, steadying after Tuesday's late price sell off following stronger-than-expected U.S. pending home sales data. At 0910 GMT, the September bund contract stood at 121.57, 0.02 higher. -By Ishaq Siddiqi, Dow Jones Newswires; +44-20-7842-9488; ishaq.siddiqi@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=py6XKysBWxRFQBX8LswcYA%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones NewswiresAugust 05, 2009 05:15 ET (09:15 GMT)Copyright 2009 Dow Jones & Company, Inc.