European stock rally fizzles out

Europe's main stock markets closed mostly lower Thursday, snapping a two-day winning streak, as fresh concerns over Ukraine came to the fore and traders cashed in profits from the recent rally. Wall Street followed the European markets lower at the opening bell, but pared losses later in the session following positive data on jobs and growth in the world's top economy. London's benchmark FTSE 100 index of leading shares closed down 0.26 percent to 6,588.32 points. Frankfurt's DAX 30 was essentially flat, up 0.03 percent compared with Wednesday's closing values to 9,451.21 points and in Paris the CAC 40 index gave up 0.14 percent to 4,379.06. By midday in the United States, the Dow Jones Industrial Average had erased most of its losses, standing down just 0.06 percent at 16,260.03 points. The S&P 500, a broad measure of the markets, shed 0.22 percent to 1,848.52, while the tech-rich Nasdaq Composite Index tumbled 0.50 percent to 4,152.66. Investors were cheered by data from the Labor Department showing that first-time claims for US unemployment benefits fell last week, by 10,000 to 311,000, adding to signs of a firming jobs market. In other positive news, the Commerce Department revised upward its estimate of US economic growth in the fourth quarter to an annual rate of 2.6 percent, matching analyst expectations. The euro retreated to a three-week low against the dollar on heavy selling after the European Central Bank hinted at a further loosening of monetary policy in the eurozone to avert deflation, traders said. "The two-day (stocks) rally has come to a halt... problems on the Russian-Ukrainian front are back in focus as the US stepped up with rhetoric," said Varengold Bank trader Anita Paluch. "Stocks are searching for direction as investors weigh economic data and the situation in Ukraine," Wells Fargo Advisors said in a market note. Asia's stock markets ended mixed on Thursday, with Japanese shares boosted by a weaker yen. Markets remained wary after President Barack Obama said that the United States and its allies needed to stand firm in opposing Moscow's takeover of Crimea. There are fears about the long-term ramifications of the stand-off, with Europe hugely reliant on Russia for its energy. Obama hailed as a "major step forward" the promise of an International Monetary Fund bailout for Ukraine, saying it was a key part of a package of aid to help political and economic transition in the former Soviet republic. "This significant support will help stabilise the economy and meet the needs of Ukrainian people over the long term because it provides the prospect for true growth," Obama said at a joint press conference with Italian Prime Minister Matteo Renzi. The IMF announced a $14-18 billion (10.8-13.1 billion euro) bailout for Ukraine to avoid bankruptcy, but it comes with painful and unpopular reforms. The agreement in principle could unlock a broader package from other governments and agencies amounting to $27 billion over the next two years. But President Vladimir Putin stepped up efforts to become independent from the West, saying that Russia should create its own national payment system. - Euro hits three-week low - In foreign exchange trading on Thursday, the euro slid to a three-week low of $1.3729. It later recovered to $1.3744, down from $1.3781 late on Wednesday in New York. The dollar rose to 102.16 yen from 102 yen Wednesday. The European single currency slid to 82.73 British pence compared with 83.12 pence on Wednesday, while the pound climbed to $1.6613 from $1.6576. The pound was boosted by data showing British consumers increased retail spending by 1.7 percent in February from the level in January when they fell more than first thought because of bad weather. Retail sales, an important indicator of household confidence, spending power and growth, had fallen by an upwardly revised 2.0 percent in January, according to the Office of National Statistics. On the London Bullion Market, the price of gold fell to $1,296 an ounce from $1,304 on Wednesday. In corporate news, shares in Alcatel-Lucent jumped 4.1 percent to $3.84 after the Nasdaq-quoted French-American telecom equipment company picked up a 750-million-euro order for high-speed Internet equipment from China Mobile.