European markets slide as global rally falters

LONDON: Europe's major stock markets kicked lower Thursday as investors shrugged off bumper Wall Street gains, cashed in recent profits and eyed mounting uncertainties on the horizon of the global economy.

Wall Street had roared back to life on Wednesday, shaking off four straight routs following strong retail sales data and White House reassurances that Federal Reserve Chair Jay Powell won't be fired.

Asian equities mostly sparkled on Thursday, with Tokyo surging but Chinese stocks slid on weak data.

European equities also hit a wall, slipping into negative territory in low-volume trade with many investors away for a long festive break.

In late morning deals, Frankfurt stocks tanked 1.7 percent as the market opened for the first time this week -- and played catch-up with Monday's heavy losses elsewhere in Europe.

London sank 0.8 percent and Paris shed almost 0.1 percent compared with Monday's closing levels.

- 'Rally hits wall' -

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"The rally which we experienced over on Wall Street yesterday has hit the wall," ThinkMarkets analyst Naeem Aslam told AFP.

"Investors are busy profit-taking. Basically, we are struggling for the momentum to continue."

New York stocks had hurtled higher in post-Christmas trade on Wednesday, following strong data and White House reassurances that Powell would remain in his post.

Sentiment also improved after a Bloomberg News report said a US government delegation would travel to Beijing in early January to hold trade talks, the first face-to-face discussion since US President Donald Trump and Chinese President Xi Jinping agreed on a 90-day trade war truce.

The Dow Jones Industrial Average finished up nearly 1,100 points, or about five percent, at 22,878.45 points, and the broad-based S&P 500 also flew five percent higher.

Investors in Europe however took the new-found optimism in their stride.

Russ Mould, investment director at stockbroker AJ Bell, warned that Wednesday's "Boxing Day bonanza" could yet prove to be a "bear trap".

"The FTSE 100 is treating a 5.0-percent surge in America's S&P 500 benchmark with a good degree of caution and it is easy to see why, even if that was the eighteenth biggest single-day gain in the US index since 1970," said Mould.

"Encouragingly, three of the seventeen other 5.0-percent-plus advances came immediately in the aftermath of the 1987 crash, when buying did prove a good plan, and two more in March 2009 when the S&P finally hit bottom as the great financial crisis began to abate.

- Bear trap? -

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"But history also shows eight of the 5.0-percent-plus gains came during the bear market of 2007-2009 and three more during the market downturn of 2000-2003 -- to suggest there is still a risk that this year's Boxing Day bonanza could be no more than a wicked bear trap set to lure investors into more trouble," Mould cautioned.

Many global investors have been unnerved by a variety of factors, including the partial US government shutdown and Trump's ongoing criticism of Fed Chair Powell.

Other negative factors include risks of a no-deal Brexit when Britain leaves the European Union in March 2019-- and the ongoing trade war between China and the United States.

Back in Asia, Chinese markets slid after the release of weak economic data, showing that profits in the industrial sector declined 1.8 percent in November. Hong Kong lost 0.7 percent and Shanghai shed 0.6 percent.

In commodity deals, oil prices on profit-taking after chalking up their biggest gains in almost two years on Wednesday.

Gold has also been soaring and was set for its biggest monthly increase in almost two years, with many investors seeking havens amid intensifying global economic woes.

- Key figures around 1100 GMT -

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London - FTSE 100: DOWN 0.8 percent at 6,630.45 points

Frankfurt - DAX 30: DOWN 1.7 percent at 10,455.65

Paris - CAC 40: DOWN 0.1 percent at 4,623.65

EURO STOXX 50: DOWN 0.4 percent at 2,960.94

Tokyo - Nikkei 225: UP 3.9 percent at 20,077.62 (close)

Hong Kong - Hang Seng: DOWN 0.7 percent at 25,478.88 (close)

Shanghai - Composite: DOWN 0.6 percent at 2,483.09 (close)

New York - Dow: UP 5.0 percent at 22,878.45 (close)

Euro/dollar: UP at $1.1400 from $1.1353 at 2200 GMT

Dollar/yen: DOWN at 110.86 yen from 111.37 yen

Pound/dollar: UP at $1.2635 from $1.2633

Oil - Brent Crude: DOWN 77 cents at $53.70 per barrel

Oil - West Texas Intermediate: DOWN 76 cents at $45.46