Subdued Ifo Takes M&A Shine Off European Stocks
European stocks and major currency and bond markets struggled for direction on Tuesday, underpinned by manufacturing data from China, Japan and the United States the previous day but unnerved by growing signs of economic weakness in Europe.
Germany's Ifo index of business sentiment fell more than expected in June, eating into gains across Europe's major stock markets that had been racked up on merger and acquisition talk. [ECON]
Crude prices pushed deeper into the red as the Ifo's signal of moderating activity in Europe's largest economy dovetailed with figures on Monday that showed oil supplies from Iraq unaffected by the Sunni Islamist insurgency there.
In early trade the FTSEurofirst 300 index of leading shares was up 0.1 percent at 1390 points .FTEU3, Germany's DAX was up 0.1 percent at 9935 points .GDAXI and France's CAC 40 .FCHI was up 0.3 percent at 4529 points.
Britain's FTSE 100 .FTSE was flat at 6799 points.
Agrochemicals company Syngenta (SYNN.VX) surged as much as 6.5 percent on a media report that peer Monsanto (MON.N) had considered buying it in a deal worth $40 billion. At 0831 GMT Syngenta was up 4.5 percent, far and away the biggest gainer among Europe's leading shares.
“Our outlook for equity markets for the remainder of the year is positive. M&A has made a welcome return in recent months,” said Mark Burgess, chief investment officer at Threadneedle Investments.
But the Ifo data put a lid on gains.
“The German Ifo data was very disappointing. Yes, it is a lagging indicator, but this is the third number in a row which is skewed towards the downside, clouding investors' confidence,” said Naeem Aslam at online trading platform AvaTrade.
Close attention was also being paid to Bank of England governor Mark Carney's testimony to parliament, which started at 0830 GMT. He is likely to be grilled by lawmakers on his surprise statement earlier this month that UK interest rate could go up later this year.
Earlier in Asia, the majority of markets edged ahead after a sluggish start, and the MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.3 percent. Japan's Nikkei .N225 added a slender 0.05 percent.
OIL EASES BACK
Major currencies were flat. The euro was at $1.3607 EUR=, the dollar was at 101.98 yen JPY= and sterling was at $1.7025 GBP=.
That left the dollar index .DXY little changed at 80.255, well within the narrow 80.000-81.000 range seen since May.
The Australian dollar was down 0.2 percent at $0.9402 AUD=, having touched a three-month peak overnight.
There was more life in commodity markets, where oil eased from recent nine-month highs after data on Monday showed that Iraq's oil exports neared record levels in June despite the Sunni Islamist insurgency sweeping through the country.
Brent crude oil futures dipped below $114 a barrel LCOc1, down 0.4 percent on the day and on track for the third straight day of decline, something not seen for a month.
U.S. oil futures CLc1 were down 0.4 percent at $105.80 a barrel.
“The supply news isn't really supporting oil prices. The only thing supporting them is the fear factor,” said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt.
Spot gold XAU= was down slightly on the day at $1,315.80 an ounce as the market consolidated last week's 3 percent jump.
U.S. Treasury bonds edged higher, pushing the 10-year benchmark yield down a basis point to 2.61 percent US10YT=RR.