EU stocks lower on US retail sales, IMF downgrades

European stock markets closed little changed Monday, coming off early lows when investors took profits on gains made last week after US retail sales data disappointed, dealers said. They noted that Madrid and Milan continued to come under pressure pending details of a deal worth up to 100 billion euros to stabilise Spain\'s strained banking system, with Italy getting caught up in the eurozone debt crisis downdraught. Dealers said that investors adjusted positions after the solid gains last week, with the traditionally quiet summer months proving volatile and testing so far. Weaker-than-expected US retail sales figures also dampened sentiment. The International Monetary Fund meanwhile cut its global growth forecasts, warning that the world economy had weakened since its last estimates in April. \"Downside risks continue to loom large ... In the past three months, the global recovery, which was not strong to start with, has shown signs of further weakness,\" it said. \"Financial market and sovereign stress in the euro-area periphery have ratcheted up,\" it added. In London, the benchmark FTSE 100 index of top companies closed just 0.07 percent lower at 5,662.43 points. In Frankfurt, the DAX 30 added a marginal 0.13 percent to 6,565.72 points while in Paris the CAC 40 was flat at 3,179.90 points. Madrid lost a hefty 1.99 percent, additionally under pressure after the IMF forecast a worsening of Spain\'s recession, and Milan fell 0.36 percent. In foreign exchange deals, the European single currency turned around to trade firmer at $1.2266, up from $1.2248 in New York late Friday when it hit $1.2163 -- the lowest since June 29, 2010 -- on eurozone debt crisis concerns. In New York, an unexpected 0.5 percent fall in US June retail sales stoked new concerns about the US economic outlook, leaving the market nowhere to go. The blue-chip Dow Jones Industrial Average was down 0.29 percent at around 1555 GMT and the tech-heavy Nasdaq slipped 0.19 percent. \"After posting a solid rally on Friday as financials-sector earnings exceeded expectations, US stocks are seeing some pressure in ... the wake of an unexpected decline in domestic retail sales for June,\" Charles Schwab & Co analysts said. Robert Brusca at FAO Economics said the weak retail sales data suggested the economy might have slowed further in the second quarter, with growth of 1.0 to 1.5 percent, down from 1.9 percent in the first. US stocks broke a six-day losing streak Friday, helped by better-than-expected quarterly results from banks JPMorgan Chase and Wells Fargo, with the DJIA jumping 1.6 percent. \"After having ended the week on a fairly strong note on Friday, European equity markets are trading little changed... with no major developments and news over the weekend to report,\" said ETX Capital trader Markus Huber. \"Equity markets are expected to mostly remain range-bound ... Some might consider Friday\'s move to the upside somewhat overdone and partially caused by short-covering ahead of the weekend.\" Asian shares edged higher Monday on the back of the strong US rally on Friday but Chinese stocks plunged to a new three-year low, after growth in the world\'s second-largest economy slowed. Shanghai slumped 1.74 percent but Hong Kong added 0.15 percent and Sydney rose 0.56 percent. Tokyo was shut for a public holiday. Data Friday showed the Chinese economy expanded 7.6 percent in the second quarter year-on-year, its slowest pace for more than three years as it was hit by ripples from the eurozone debt crisis and slow US recovery.