European Stocks End Mixed after Trichet
European stocks closed mixed in the afternoon session Monday, after European Central Bank President Jean-Claude Trichet kept the options open for euro-zone rate moves ahead of an ECB monetary policy meeting next week.
The Paris CAC-40 and the Swiss SMI were slightly higher, while the Frankfurt DAX as well as the Italian and the Spanish markets were slightly lower. The London FTSE-100 was closed for a holiday, therefore European trading volumes were thin.
Jean-Claude Trichet gave little away on his euro-zone interest-rate strategy when speaking in Budapest for the annual congress of the European Economic Association. The central bank president said he was not pre-committed to any rate moves.
But he also said his remarks on August 2, when he spoke of "strong vigilance" - an expression that usually signals a rate hike at the next ECB meeting - were made before the turmoil which has swept financial markets over the past three weeks.
Analysts said Trichet's remarks were to vague to signal a clear direction for the ECB's rate-setting meeting on September 6, but the euro fell as some traders believed they meant the bank would leave rates on hold.
Speculation on mergers and acquisitions among major stock exchanges was rife following an unsourced report from the Sunday Times claiming the Nasdaq Stock Marketmay have found a buyer for its 30% stake in the London Stock Exchange. The report said Temasek Holdings approached the U.S. bourse, but the Singapore state-owned company denied it was interested in the LSE stake, according to a Dow Jones reporting citing an inside source.
In corporate news, recent subprime-related turmoil forced the government of the eastern German state of Saxony to sell SachsenLB to Stuttgart-based LBBW on Sunday.
And Swedish engineering company ABBsaid it will sell its Lummus Global unit to Chicago Bridge and Iron for $950 million.
European stocks were expected to show a clearer direction on Tuesday, when trading resumes in London after a bank holiday and the markets would fully assess the impact of weak existing home sales data in the U.S.