London: Global stock markets were mostly higher but a mixed set of US data took the gloss off an otherwise strong showing on Friday, driven by hopes the global recovery remains on track despite the European debt crisis.
Asian and European shares posted solid gains earlier after an overnight rally of 2.76% on Wall Street boosted risk appetite, encouraging investors to look for bargains after recent heavy losses.
Dealer said, however, that the picture remained very mixed overall. The markets want European governments to take the measures needed to balance the public finances but at the same time fear such steps could undercut growth.
US data supports the recovery theme but as on Friday it is not a one-way story -- US retail sales, a key component of growth, fell in May but paradoxically, US consumer confidence improved for June.
US employment figures paint a similar picture of mixed progress while Chinese data on Friday showed a slowdown in factory output and investment growth even as inflation picked up, complicating Beijing’s efforts to maintain steady economic growth.
In New York, the market opened lower after the May retail sales figures but then recovered some ground on the better-than-expected consumer sentiment.
The blue-chip Dow Jones Industrial Average was down 0.39% while the tech-rich Nasdaq Composite index was up 0.22% at around 1640 GMT.
“The big question is whether the stock market will hold the gains realized from (Thursday’s) huge market rally,” said Frederic Dickson at DA Davidson & Co. “Today’s May retail sales report was disappointing.”
US retail sales fell for the first time in eight months in May, dropping 1.2% against market forecasts for a rise of 0.2%.
The steep decline in retail sales “confirms the forecast for modest spending growth going forward more than threatens it,” said Scott Hoyt at Moody’s Economy.com. “Consumers will not lead the recovery,” he added.
Meanwhile, the University of Michigan’s consumer sentiment index rose to 75.5 in June from 73.6 in May, its highest level since January 2008 and a percentage point above forecasts.
On the currency market the euro fell back after the US retail sales data, giving up some recent gains as investors preferred the less risky dollar.
In late London trade, the euro was at $1.2076, down sharply from $1.2122 in New York late Thursday.
Gold finished at $1,220 an ounce, up from Thursday’s close $1,217.50.
In Europe, some of the early gains were pared by the finish as investors tracked the uncertain opening on Wall Street but markets were mostly higher.
London’s benchmark FTSE 100 index of leading shares closed up 0.61% at 5,163.68 points. In Paris, the CAC 40 rose 1.11% to 3,555.52 points but in Frankfurt the DAX slipped 0.14% to 6,047.83 points.
Madrid stood out with a gain of 3.95%, led by the banks after Spain’s top lender Santander said it expected to match 2009’s earnings this year, helping ease some concerns over the country’s debt and deficit problems.
IG Index analyst David Jones in London said trade was volatile “with US data raising familiar concerns about how solid the economic recovery is.”
“A strong finish to trading on Wall Street on Thursday has given a welcome boost to shares in London,” said Anthony Grech, head of research at financial spread-betting company IG Index.
The market was helped by a very sharp rebound for British energy giant BP, which gained more than 7% on bargain-hunting after recent heavy losses sparked by its handling of the Gulf of Mexico oil spill.