Sun, Aug 24, 2014 - Page 15 News List

European equities’ rally tempered by Fed, Kiev worries


European stocks declined on Friday, paring their biggest weekly gain in six months, after US Federal Reserve Chair Janet Yellen underscored the persistence of labor-market slack in the US economy and as investors watched rising tensions in Ukraine.

Piraeus Bank SA and Banca Monte dei Paschi di Siena SpA gained at least 2.8 percent as a gauge of lenders advanced for a second day. Essentra PLC climbed 3.1 percent after JPMorgan Chase & Co raised its rating on the UK maker of items from toothpaste tubes to packaging tape.

The STOXX Europe 600 Index slipped 0.2 percent to 336.75 at the close of trading in London. The gauge earlier dropped as much as 0.7 percent after Russian aid trucks entered Ukraine without consent from Kiev.

The STOXX 600 rallied 2.1 percent this week as investors bet that industrial slowdown in the euro area would increase pressure on the European Central Bank to introduce asset purchases known as quantitative easing.

“We’re so used to Yellen being an arch dove, anything less than that is treated with some disappointment,” Michael Ingram, a market strategist at BGC Brokers LP in London, said by telephone. “But it does look like the market is edgy particularly in light of the Fed minutes we saw earlier in the week. The center of gravity in terms of a rate decision does seem to be moving toward an earlier rise,” he said.

In remarks that appeared to be in line with the minutes of the Fed’s latest policy meeting, Yellen said on Friday that slack remains in the US labor market even after gains made during the five years of economic recovery. Stocks briefly pared losses after her comments.

“The economy has made considerable progress in recovering from the largest and most sustained loss of employment” since the Great Depression, Yellen said in a speech at the Kansas City Fed’s annual economics conference in Jackson Hole, Wyoming.

Even so, she underscored the Federal Open Market Committee statement last month that “underutilization of labor resources still remains significant.”

Yellen also said the Fed’s assessment of employment slack has become challenging and there is no simple recipe for appropriate policy.

National benchmark indices fell in all the western European markets except Greece on Friday. The UK’s FTSE 100 Index slipped less than 0.1 percent, France’s CAC 40 retreated 0.9 percent and Germany’s DAX lost 0.7 percent. The ASE Index in Athens climbed 1.1 percent, taking its rally since a 10-month low on Aug. 8 to 10 percent.

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