European stocks steady on stimulus, weak global data

LONDON (AFP) - European shares were steady Thursday after the Federal Reserve said it was considering tapering its stimulus in the coming months, while the mining sector was hit by poor global manufacturing data.

News that first-time claims for US unemployment benefits fell last week to their lowest level in two months failed to give direction with mixed data from the eurozone counter-weighting sentiment.

London's benchmark FTSE 100 index closed virtually unchanged at 6,681.33 points, the CAC 40 in Paris slid 0.34 percent to 4,253.9 points, while Frankfurt's DAX 30 edged down 0.07 percent to 9,196.08 points.

Europe?s markets have struggled for direction today as investors absorb the uncertainty generated by last nights Fed minutes and the prospect of a December taper of asset purchases," said Michael Hewson, Chief Market Analyst at CMC Markets UK.

"Sentiment hasn?t been helped by continued divergence between the French and German economies as the latest flash PMI data showed economies going in completely different directions," he added.

Fed board members felt recent economic indicators showed that the US central bank could start cutting down its $85 billion-a-month bond-buying scheme "in coming months", according to minutes of its October policy meeting.

They reiterated that any such move was contingent on a continued strengthening of the US economy, and stressed that even if the programme was ended the bank was looking at other ways to keep short-term interest rates down.

Markets had faced selling pressure after HSBC said overnight that growth in Chinese manufacturing activity slowed in November.

HSBC bank said its preliminary purchasing managers' index of manufacturing came in at 50.4, down from a final reading of 50.9 in October, which was a seven-month high.

The figures -- the result of weaker export orders -- threw a cloud over prospects for the Chinese economy. A reading above 50 indicates growth, while anything below signals contraction.

Euro gains against dollar

And in another blow to sentiment on Thursday, a key survey showed that eurozone business activity slowed again in November, stoking concerns that growth is at risk as the bloc struggles out of a record recession.

The Eurozone Composite Purchasing Managers Index (PMI) for November, compiled by Markit Economics, fell to a three-month low of 51.5 points from 51.9 in October.

Among the most worrying details, activity in France, the second-biggest economy in the eurozone, shrank in November for the first time for three months, Markit said.

The poor economic data weighed particularly on the metals and mining sector, because China is a major consumer of raw materials.

In London, shares in Vedanta Resources slid 2.94 percent to 923 pence and Fresnillo shed 4.53 percent to 863.5 pence.

In Frankfurt, steel giant Thyssenkrupp saw its share price retreat 1.91 percent to 18.72 euros.

Lufthansa jumped 1.68 percent to 15.70 euros, as talks between Angela Merkel's Christian Democrats and the SPD on forming a government was reported to include a pledge to axe a tax on air travel.

Across in Paris, Michelin dropped 2.06 percent to 79 euros after the French tyre manufacturer was handed a broker downgrade from HSBC.

Shares in information services company Atos fell 4.09 percent to 61.7 euros after one of its main investors sold off a huge bloc of shares.

In foreign exchange activity on Thursday, the European single currency rose to $1.3468 from $1.3435 late in New York on Wednesday.

The euro fell to 83.36 pence against the British pound, which edged up $1.6156. The dollar firmed to 100.94 yen from 100.03 yen on Wednesday.

On the London Bullion Market, the price of gold slid to $1,240 an ounce from $1,241.13 on Wednesday.

US stocks were higher Thursday shrugging off some disappointing earnings from retail equities and recovering ground after Wednesday's losses.

In midday trade, the Dow Jones Industrial Average advanced 0.58 percent to 15,993.34, the broad-based S&P 500 rose 0.60 percent to 1,792.02, while the tech-rich Nasdaq Composite Index tacked on 0.91 percent to 3,956.86.