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European shares mixed after strong gains

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(Globalpost/GlobalPost)

European stock markets traded mixed on Thursday after two days of strong gains, as traders digested news of an unexpected drop in German unemployment and rising Italian bond yields.

London's FTSE 100 index of leading shares rose 0.19 percent to stand at 6,176.90 points in midday deals.

Frankfurt's DAX 30 was flat at 7,939.83 points and in Paris the CAC 40 dipped 0.11 percent at 3,721.77.

Madrid's main index slumped 0.99 percent and Milan lost 0.17 percent.

European equities had on Wednesday rallied for a second day in the wake of positive US economic data.

"A steady session for European markets (Thursday) thanks to a better than expected German unemployment report which instilled some confidence," said Ishaq Siddiqi, market strategist at ETX Capital traders.

"The euro gained some momentum versus the US dollar following the German jobs data which showed jobless claims form the country unexpectedly dropped last month after three straight months of increases," he added.

German unemployment registered a surprising fall in June when the labour market in Europe's biggest economy proved robust, official data showed on Thursday while many EU countries battle lengthening jobless queues.

The unemployment rate stood at 6.8 percent this month in seasonally-adjusted terms, according to monthly figures compiled by the Federal Labour Office.

Elsewhere, Italy's borrowing costs edged up at an auction of medium and long-term bonds on Thursday, but rose less than expected, following an easing in investor fears over the Federal Reserve's plans to wind down its stimulus programme.

In London, official data revealed that Britain's economy expanded by 0.3 percent in the first quarter of 2013, and never experienced a double-dip recession as previously thought.

In foreign exchange trading, the euro rose to $1.3029 from $1.3012 late in New York on Wednesday.

The dollar grew to 98.03 yen from 97.72 yen on Wednesday.

On the London Bullion Market, the price of gold edged up to $1,236.35 an ounce from $1,236.25. The precious metal had struck the lowest point for nearly three years on Wednesday, at $1.221.99 an ounce, before recovering.

The US Commerce Department on Wednesday slashed its estimate for first-quarter growth in the world's biggest economy from 2.4 percent to 1.8 percent.

The data raised the prospect that the Fed will sit tight on winding down its bond-buying scheme, known as quantitative easing (QE), as it waits for the economy to show more signs of strength.

In Europe on Thursday, the Italian Treasury raised 2.5 billion euros ($3.25 billion) in bonds due to expire in 2018 at a rate of 3.47 percent, compared to 3.01 percent at the end of May.

It also raised 2.5 billion euros in ten-year paper set to mature in 2023 at a rate of 4.55 percent, compared to 4.14 percent at a similar operation on May 30.

The rise in rates suggested increased investor concern over Italy's political stability following the conviction on Monday of former premier Silvio Berlusconi for paying an underage prostitute for sex.

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http://www.globalpost.com/dispatch/news/afp/130627/european-shares-mixed-after-strong-gains