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Financial and industrial stocks lead European equities lower

Stocks are slipping in Europe, taking their lead from a lacklustre showing in Asia and the US, while the dollar index is softer, it is holding above its recent eight-month low.

The Euro Stoxx 600 is 0.4 per cent weaker, taking the international index back toward the 10-week low it hit on Friday. The Xetra Dax 30 down 0.7 per cent and the FTSE 100 is 0.5 per cent softer.

Financial, industrial and resource stocks are leading the selling. With US markets scheduled to remain closed for a public holiday, attention remains on a trading glitch overnight which hit some of Wall Street’s biggest names.

A host of Nasdaq-listed stocks were all set at $123.47 a share, seemingly owing to a computer glitch, seeing Apple stocks take a dive while Zynga rocketed more than 3,000 per cent. In after-hours trading on the eve of the US Independence Day holiday, data from several sources reported companies including Apple, Amazon, Zynga, eBay, Microsoft and Bed Bath & Beyond were all trading at $123.47.

This saw Amazon’s share price drop 87.2 per cent with Apple down 14.3 per cent. A Nasdaq spokesman said a number of third-party data vendors had taken routine test data and reported that as the actual price.

The Australian dollar is 0.7 per cent weaker against at $0.7606 after the Reserve Bank of Australia held its cash rate target at 1.5 per cent as expected, without sounding as much of a hawkish tone on policy as expected. The pound is up 0.1 per cent at $1.2952, with the euro up 0.1 per cent at $1.1365. The Japanese yen is 0.5 per cent stronger at ¥112.86 per dollar. Against the euro, the pound is 0.1 per cent stronger at £0.8774.

European sovereign debt yields are marginally lower across the board as investors continue to buy back into bonds after last week’s heavy selling. The German 10-year yield is down 1 basis point at 0.464 per cent. Italy’s 10-year debt yield is flat at 2.134 per cent. The yield on 10-year UK gilts is down 2 basis points at 1.247 per cent.

The dollar index, which measures the greenback against a basket of peers, is holding above the eight-month low hit two sessions ago, but is softer on the day at 96.164, down 0.1 per cent.

Andrew Milligan, head of global strategy at Standard Life Investments said:

Investors face an interesting time; at this point in the investment cycle there are often concerns that monetary tightening will bring the economic recovery to an end until investors realise that moderate tightening will actually prolong the business cycle, and still allow positive profits growth.

The tensions are more apparent on this occasion as economic stimulus has clearly restrained bond yields, so how will a rise in the discount rate affect equity markets, especially as it appears that there could be a combination of tightening steps from a variety of sources.