EU stocks mixed as investors eye German EFSF vote and US GDP

European stocks were mixed on Thursday, with the FTSE 100 losing 20 points whilst peer EU Indices the DAX and CAC both saw gains of between 0.3% and 0.5%. However, it is likely to be a news intensive day with all investor’s eyes on the EFSF vote in the German parliament, the return of the Troika to Athens and a final reading for Q2 US GDP in the afternoon.

The markets are expecting German lawmakers to pass the new powers given to the EFSF that were decided in July, though naturally investors will be wary of any surprises. Should the positive result come, as expected, it will also be interesting to see how many dissenters were in Merkel’s camp and as such how many votes she relied on from the opposition parties. A strong dissent in her own collation camp could be very embarrassing for Germany’s leader, who faces a strong backlash over her support for Greece and indebted nations at home using German taxpayer money, and would further weaken her own position and create more political uncertainty in Europe’s strongest economic state.

Should the bill on the new powers of the EFSF be rejected in the German parliament, it would be a deep shock to the markets and the consequences of which could be far reaching.

We also have EU economic sentiment data out at 10am along with a final reading of second quarter US GDP, which is expected to be revised higher to 1.2% from a previous reading of 1%.

A return of the Troika (EU, ECB and IMF) to Athens today, where they will finalise their review into the progress made in Greece to meet the conditions set that would enable them to receive the next tranche of bailout funds will also be deeply watched by investors today. Traders will likely be on their guard for any clues given as to whether a renegotiation of the bailout terms is warranted and particularly for that of private bond holders.

Weighing on trade in London was selling of the heavyweight miners, with the sector losing another 1% and tracking further declines in the price of Copper, whilst oil firms also weighed despite a rise in Crude Oil prices today of 1%.

UK banks were largely flat on the day whilst gains were seen for defensive stock sectors such as pharmaceutical firms.

Tata and Lyle shares rose straight to the top of the FTSE 100, rallying 2%, after the firm said that the encouraging start to the financial year had continued into the second half with solid demand. The company also expected to see another year of profitable growth. Tate and Lyle shares hit a new two month high on the back of the shareholder cheer created by today’s trading update.

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