Euro stocks mostly lower on Bernanke\'s testimony; DAX up 0.18%

Investing.com - European stocks closed mixed  Tuesday, as Fed chief Bernanke disappointed equity bulls by not suggesting imminent economic stimulus and by stating the U.S. economy has slowed.

Ongoing concerns over rising borrowing costs for peripheral euro zone nations and fears over the health of the global economy limited any significant gains.

At the close of European trade, the EURO STOXX 50 fell 0.05%, France’s CAC 40 dropped 0.09%, while Germany’s DAX 30 bucked the downtrend climbing 0.18%.

Knocking stocks lower, Bernanke delivered a negative assessment of the outlook for the U.S. economy, saying growth had lost momentum in the first half of the year and added that efforts to reduce the U.S. unemployment rate were progressing “frustratingly” slowly.

However, he stopped short of indicating whether the Fed would embark on a third round of quantitative easing to stimulate the economy, but reiterated that the central bank was prepared to take further action to support the economic recovery, if necessary.

Gains were limited amid concerns over rising borrowing costs and the lack of substantial progress in tackling the euro zone’s sovereign debt crisis.

Spain saw short-term borrowing costs fall at an auction of 12 and 18-month government bonds earlier, but the yield on the country’s 10-year bonds was at 6.87%, remaining close to the critical 7% threshold amid sustained concerns over the country’s finances.

Also Tuesday, data showed that German economic sentiment deteriorated for the third consecutive month in July, as concerns over the euro zone’s ongoing debt crisis continued to weigh.

The ZEW Centre for Economic Research said that its index of German economic sentiment fell to minus 19.6 in July from June’s reading of minus 16.9, but was slightly better than expectations for a decline to minus 20.0.

Germany’s constitutional court announced Monday that it will not deliver a ruling on whether the euro zone’s permanent bailout fund contravenes the German constitution until September 12, disappointing hopes for an earlier decision.

Meanwhile, investors continued to worry over downbeat global growth prospects and its impact on company earnings.

The International Monetary Fund on Monday reduced its outlook for global growth to 3.5% from its April forecast of 3.6%, citing the impact of the euro zone’s ongoing debt crisis on emerging market economies.

Shares in French telecommunications equipment giant Alcatel Lucent plunged 14.5% after warning that full-year adjusted operating-profit margin will likely come in below estimates, citing “year-to-date performance and the difficult macro-economic environment.”

Shares in Nokia lost 4%, extending a recent slump, after Jefferies downgraded the stock to ‘underperform’ from ‘hold’.  The Finnish phone manufacturer reports earnings on Thursday. 

But financial sector stocks were higher, with Societe Generale up 2.7%, BBVA gaining 2% and BNP Paribas rising 1.3%.

Elsewhere, in London, the FTSE 100 declined 0.59%, upon data indicating consumer price inflation fell to its lowest in more than two-and-a-half year last month.

The Office for National Statistics said the annual rate of consumer price inflation dropped to 2.4% from 2.8% in May, the lowest level since November 2009. Economists had expected the rate of inflation to remain unchanged.

Shares in building supplies group Wolseley dropped 3.1% after warning that it was suffering from ongoing “difficult market conditions” in continental Europe. The firm said it would review the carrying value of some assets, which is likely to give rise to a noncash impairment charge.

The world’s largest security firm G4S tumbled 4.3%, a day after it warned it would incur a loss between GBP35 million and GBP50 million on its Olympic Games contract. 

But shares in Barclays were higher, gaining 1.6%, as the Libor manipulation scandal remained in the spotlight.

The Dow trade higher by 0.35%, the S&P 500 added 0.34% and the Nasdaq eased up 0.10% during the afternoon U.S. session.

Markets are awaiting the Bank of Canada’s monetary policy report as well as the Beige Book numbers from the U.S. on Wednesday.