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European stocks waver on Italy progress, US data

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(Globalpost/GlobalPost)

European stocks were mixed on Monday as traders balanced political progress in Italy with disappointing earnings and housing data from the US.

On the the foreign exchange markets the dollar dominated sentiment as it spiked close to the 100 yen mark after the G20 cautiously endorsed the Bank of Japan's huge stimulus measures despite wariness from emerging countries.

At close, London's FTSE 100 index of leading companies was 0.09 percent lower at 6,280.62 points, in Paris the CAC 40 was flat at 3,652.13 points, while in Frankfurt the DAX 30 gained 0.24 percent to 7,478.11 points.

The best performing European market was Italy's FTSE MIB index, which jumped 1.57 percent to 16,007.10 points on investor relief after the surprise re-election of President Giorgio Napolitano over the weekend.

At his swearing-in ceremony on Monday Napolitano urged Italy's political parties to form a new government "without delay" and said their failure to implement key economic and institutional reforms was "unforgiveable".

US stocks were also mixed with off the mark earnings from heavy industrial machinery giant Caterpillar weighing on sentiment.

In midday trading, the Dow Jones Industrial Average fell 0.33 percent, the broad-based S&P 500 added 0.07 percent, and the tech-rich Nasdaq Composite Index climbed 0.57 percent.

Caterpillar said net income came in at $880 million, down 45.4 percent from the year-ago period, citing a weakening outlook in its mining business.

The National Association of Realtors meanwhile reported that US existing-home sales declined in March by 0.6 percent from February.

In foreign exchange activity, the dollar spiked to 99.90 yen in Asian trading hours, reaching the highest level since April 11. It later stood at 99.32 yen in London deals, up from 99.52 yen late in New York on Friday.

The dollar has not breached the key 100-yen barrier since April 2009.

"Continued depreciation of the yen is still driving sentiment in equity markets across Asia, with statements in the G20 meeting being the latest driver to help propel dollar/yen back toward that 100 level," said GFT Markets analyst Fawad Razaqzada.

Meanwhile, the euro edged down to $1.3048 from $1.3049 late on Friday. On the London Bullion Market, gold climbed to $1,424.50 an ounce from $1,405.50.

Asian markets mostly climbed on Monday, with Tokyo surging in value on the back of the falling yen, which boosts exporters.

Tokyo jumped 1.89 percent, while Seoul was up 1.03 percent, Sydney rose 0.70 percent and Hong Kong added 0.14 percent.

Chinese stocks dipped 0.11 percent, however, as insurers suffered a sell-off after an earthquake struck Sichuan province, leaving more than 200 dead or missing and destroying villages.

The early gains by the yen were made after the Group of 20 (G20) economic powers agreed that Japan's huge monetary easing measures unveiled this month were necessary to boost the country's stagnant economy.

In a statement following their meeting in Washington, G20 finance chiefs said the policy actions "are intended to stop deflation and support domestic demand."

Many countries, including the United States, have expressed concern that Japan could be deliberately trying to force the yen lower to boost exports and cut imports via "competitive devaluation."

But the G20, which includes the United States and Japan, called for more efforts to stimulate "strong, sustainable and balanced" growth globally, and took note of Japan's efforts towards that.

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http://www.globalpost.com/dispatch/news/afp/130422/european-stocks-waver-italy-progress-us-data