European shares extend losses on U.S. data
Tue Aug 1, 2006 10:15am ET
LONDON, Aug 1 (Reuters) - European shares extended losses on Tuesday after U.S. economic data revived fears that the Federal Reserve will continue with its monetary tightening campaign.
Fighting in the Middle East and a mixed batch of corporate earnings also weighed on global equities.
The pan-European FTSEurofirst 300 index <FTEU3> was 0.9 percent down at 1,326.9 with the Dow Jones industrial average <DJI> falling 0.7 percent to 11,111.88 and the Nasdaq Composite <IXIC> dropping 1.4 percent.
The Institute for Supply Management said its index of U.S. national factory activity rose to 54.7 in July from 53.8 in June, beating economists' forecasts for a slight fall to 53.7.
"The ISM figures seem to be suggesting that the U.S. inflation situation is now outside the Fed's comfort zone so we're looking at more chances of a rate increase again," a London trader said.
European shares and U.S. stock index futures had earlier ticked up after data showed core U.S. consumer prices rose 0.2 percent in June, as expected, but they soon fell back as investors digested the full report.
Dutch telecom KPN (KPN.AS: Quote, Profile, Research) jumped 5 percent on forecast-beating results but Deutsche Bank (DBKGn.DE: Quote, Profile, Research) slipped almost 4 percent after reporting poor trading income in the second quarter.