European stock indices closed mostly down on Wednesday as only Germany's DAX rose slightly, following strong US fundamentals on GDP and home sales.
by Mario Santa
Frankfurt - Equities in Europe ended the Wednesday trading day mostly in negative territory, driven by the strong US data on gross domestic product (GDP), while the US pending home sales beat analysts' expectations in August.
The pan-European Euro Stoxx 50 index closed 0.32% lower at 2,434.32 points, while the UK FTSE 100 index ended 0.56% lower, standing at 5,743.53 points.
France's CAC 40 index ended the session 0.51% in the negative territory at 3,413.89 points. Germany's benchmark DAX added 0.11% ending the trading day at 7,010.57 points.
GDP in the United States increased at an annual rate of 1.7% in the second quarter, slowing down from the first-quarter growth pace of 2%, the US Department of Commerce announced on Wednesday.
Even though the real data perfectly matched market expectations, the official estimate is actually still far below the 3% rise deemed able to bring down the unemployment.
The European Central Bank confirmed on Tuesday that its president Mario Draghi will not be attending the Jackson Hole symposium due to a heavy workload.
Meanwhile in Berlin, meetings of European top-officials continue on Wednesday as the German Chancellor Angela Merkel is scheduled to talk with Italy's Prime Minister Mario Monti. Afterwards, Merkel will travel to China to assure investors that the Eurozone is a safe place for investment, according to a report by Reuters.
The Spanish debt woes came into focus once again on Tuesday as a spokesman for Catalonia said the region, which generates around a fifth of Spain's economic output, will need financial aid amounting to over €5 billion from the central government.
The US Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 2.4% to 101.7 in July from 99.3 in June and is 12.4% above the July 2011 level, when it was 90.5, the National Association of Realtors announced on Wednesday. Such a result exceeded analysts' expectation who predicted a 1% gain.
Markets are still eagerly awaiting further hints on central banks' policies to stem the crisis. Closely watched will be the message of the Chairman of the Fed Ben Bernanke, who is scheduled to deliver a speech on Friday, August 31, at a regional branch of the Fed in Jackson Hole.
The Fed in its August minutes stated it will "provide additional accommodation as needed to promote a stronger economic recovery." A set of fresh data on the US economy is scheduled to be released on Wednesday.
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