European stocks mostly drop on Italy bond auction

European stocks mostly drop on Italy bond auction

European stocks mainly fell on Thursday as investors reacted to a downbeat Italian bond auction before the release of US economic data and company results.

London’s benchmark FTSE 100 index dipped 0.13 percent to 5,627.55 points in midday deals, while the Paris CAC 40 slid 0.24 percent to 3,229.84 points, but Frankfurt’s DAX 30 rose 0.46 percent to 6,705.59.

Milan dropped 0.79 percent and Madrid sank 1.36 percent.

In foreign exchange trade, the euro rose to $1.3121 from $1.3108 late in New York on Wednesday, while prices for Italian and Spanish 10-year government bonds declined.

Italy raised 4.9 billion euros ($6.5 billion) in a bond issue on Thursday, just short of its maximum target as the rate on three-year bonds rose sharply from the last such sale.

Bond rates and prices move in opposite directions, and the Treasury had been hoping to raise a maximum of 5.0 billion euros.

Wall Street had rallied on Wednesday from steep losses on Tuesday, lifted by a surprise quarterly profit for aluminium producer Alcoa and easing eurozone bond yields.

Later Thursday, investors will digest a raft of economic data in the United States, following weaker-than-expected non-farm payrolls figures last week.

The focus will switch on Friday to crucial first-quarter economic growth data in Asian powerhouse China, as well as US consumer price inflation numbers.

Asian markets rebounded on Thursday after a three-day sell-off as renewed fears over eurozone debt were soothed with the ECB indicating it could step in if needed.

Sentiment was also boosted by ongoing speculation over looser Chinese monetary policy, dealers added.

European equities had meanwhile risen on Wednesday following heavy losses on Tuesday that were sparked by renewed fears over Spanish debt and weak global economic growth.

Sentiment was soothed after European Central Bank board member Benoit Coeure suggested that markets were overestimating the extent of Spain’s problems, and did not rule out additional purchases of sovereign debt.

Back in Asia, ongoing jitters over the strength of the global economy kept a lid on gains Thursday while geopolitical concerns weighed amid North Korean plans for a rocket launch.

Hong Kong finished 0.93 percent higher, Tokyo added 0.70 percent, Sydney rose 0.81 percent, while Seoul fell 0.39 percent.

North Korea prepared to fire a long-range rocket which it says will place a satellite in orbit for peaceful research purposes.

Western critics see the launch as a thinly veiled ballistic missile test, and the United Nations has banned such tests by Pyongyang.