Wednesday, 19 August 2015 23:37
LONDON: European stock markets closed lower on Wednesday, dragged down by volatile trading in Shanghai amid concerns over China, the world’s second biggest economy.
Shanghai’s index managed to close 1.23 percent higher, thanks to late bargain hunting after a more than five percent plunge in morning trade.
London’s benchmark FTSE 100 index finished the day down 1.88 percent at 6,403.45 points in the British capital.
Frankfurt’s DAX 30 ended 2.14 percent lower at 10,682.15 points and the CAC 40 in Paris shed 1.75 percent at 4,884.10 compared with Tuesday’s close.
Athens’ main index however rose 0.32 percent to 675.33 points, after the German parliament voted by an overwhelming majority to back a third bailout for Greece, with Chancellor Angela Merkel spared a major rebellion of legislators opposing the aid.
In foreign exchange, the euro rose to $ 1.1065 from $ 1.1029 late on Tuesday in New York.
The dollar dipped before the release of minutes from the US Federal Reserve’s last meeting, which investors hope will offer fresh clues about the timing of an interest rate rise.
European equity markets meanwhile dropped “as once again weaker markets in Asia are souring sentiment for investors”, said Markus Huber, senior analyst at brokers Peregrine & Black.
Asian stock markets closed mixed on Wednesday, with Shanghai rebounding from heavy falls on more state support, while Tokyo slumped after the release of weak trade data.
China’s central bank has made $ 17 billion (15.3 billion euros) available to more than a dozen financial institutions to help boost the economy, it said Wednesday, a day after injecting nearly $ 100 billion into two government policy banks.
Elsewhere, markets were eyeing the Fed minutes to see if they back up growing expectations of a US rate hike as early as next month.
Some analysts have argued that the US central bank could delay any increase following China’s devaluation of the yuan last week — news that weighed on the dollar.
“Fed Chair Janet Yellen has been very clear in her view in recent months that the first rate hike in more than nine years should come this year,” noted Craig Erlam, senior market analyst at Oanda trading group.
“Inflation has been a key concern for the US for some time and the strong dollar has not helped matters. The low inflation environment is expected to continue for some time yet, with wages likely to remain fairly suppressed as US companies do whatever it takes to compete with their foreign peers,” he added.
Briefing.com analyst Patrick O’Hare agreed that recent events — including China’s currency devaluation and a further slide in oil prices — may have overtaken the Fed’s earlier deliberations.
“The major risk with the minutes today is that they will be over-analysed and subject to accusations that (what) was said then may not necessarily apply now,” he said.
Awaiting word from the Fed Wall Street was trading lower Wednesday, with the Dow Jones Industrial Average down 1.25 percent at 17,291.67 points in deals around noon.
The broad-based S&P 500 dropped 0.26 percent to 2,096.92 points, while the tech-rich Nasdaq Composite Index lost 1.18 percent at 4,999.53.
Back in Europe, lawmakers in the German Bundestag lower house approved the 86 billion euro ($ 95 billion) bailout to Greece by 454 votes to 113.
As Europe’s biggest economy and contributor to Greek aid, Germany plays a key role in the emergency package approved also by eurozone finance ministers.
