London: European stock markets closed lower on Monday as better-than-expected US data offset concerns over the Greek debt crisis and a fraud probe into giant investment bank Goldman Sachs.
Dealers said an apparent easing in the European flight ban due to the volcanic eruption in Iceland gave the airlines and associated companies a bit of a breather and lightened the tone overall after heavy early losses.
Growing calls in the United States and Europe for a close look at Goldman Sachs’ role in the US subprime home loan disaster kept the banks under pressure although they also got a lift from Citigroup’s strong return to profit.
Dealers said some feared the US Securities and Exchange Commission might conduct a wider crackdown while Goldman Sachs has strongly denied any wrongdoing.
They said markets finished off their lows after news that the Conference Board’s leading economic index jumped a higher-than-expected 1.4% in March, following a revised 0.4% gain in February and a 0.6% rise in January.
Most analysts had expected a 1.1% rise in March.
In London, the benchmark FTSE 100 index closed down 0.28% at 5,727.91 points. In Paris, the CAC 40 index shed 0.41% to 3,970.47 points and in Frankfurt, the DAX dropped 0.30% to 6,162.44 points.
“The fallout from the Goldman Sachs announcement continues to dominate headlines,” said Simon Denham, head of London-based trading firm Capital Spreads.
“Coupled with this is the volcanic cloud problems afflicting airlines.”
Markets fell sharply on Friday after the US Securities and Exchange Commission charged Goldman Sachs with fraud and Monday proved difficult again as the airlines reported heavy losses due to the European airspace shut-down.
Later in the day, it appeared that the volcanic eruption was losing strength and that some flights could resume as soon as Tuesday, offering a glimmer of hope.
British Airways lost 1.40% while among the tour operators Thomas Cook shed 1.61% and TUI Travel 1.20%, all off early lows.
The banks also recovered some lost ground, with HSBC down 1.00% and Barclays off 0.78%.
In Paris, Yves Marcais of Global Equities said the that with the markets all running at highs for the year, the series of bad news leads allowed for some profit taking.
“The markets needs an excuse to take profits,” Marcais said.
On Wall Street, the blue-chip Dow Jones Industrial Average was down 0.25% at around 1615 GMT and the tech-rich Nasdaq Composite dropped 1.04%.
The uncertainty raised by the charges against Goldman prompted calls for further inquiry by Germany and Britain and “kept buyers sidelined,” said Briefing.com’s analyst Patrick O’Hare.
Large losses in Asia overnight, compounded by China’s stepped-up efforts to curb property speculation, contributed to the negative bias, he said.
“The Conference Board’s leading and coincident indicators reaffirm our view that the recovery is well-entrenched,” noted Michael Bratus, an associate economist with Moody’s Economy.com.
There was some support after US banking giant Citigroup posted a profit of $4.4 billion in the first quarter of this year, its best earnings since early 2007, which helped limit the losses.
“The uneasiness toward the (Goldman) group is overshadowing a better-than-expected profit report from Citigroup,” said analysts at Charles Schwab & Co.
Elsewhere in Europe, Amsterdam shed 0.34%, Brussels lost 0.72%, Madrid was down 0.54%, Milan fell 0.96% and Swiss stocks dropped 1.31%.
In Asian trade earlier Monday, Tokyo’s benchmark Nikkei stock index closed down 1.74%, tracking Friday’s falls on Wall Street.
Hong Kong dropped 2.10% as Shanghai dived 4.79% after property developers were hit by an announcement from Beijing of further tightening measures to cool the property market, dealers said.
Sydney was down 1.40%.