European stocks pare back losses ahead of Easter break

European stocks closed mixed Thursday but off early lows ahead of the Easter break, finding some support in solid US jobs data a day after a sharp reverse on fresh concerns about the eurozone. At the close, London's benchmark FTSE 100 index of top companies rose 0.35 percent to 5,723.67 points after the Bank of England kept its key interest rate at a record low 0.50 percent, as expected. In Frankfurt, the DAX 30 slipped 0.13 percent to 6,775.26 points while in Paris the CAC 40 gained 0.19 percent to 3,319.81 points. Madrid ended flat and Milan retreated 0.20 percent. "European markets have finished the week lower for the third week in a row as concerns about a prolonged European recession and rapidly rising Spanish (borrowing) costs weigh on market sentiment," Michael Hewson of CMC Markets said. Most European markets will be closed for on Friday and Monday for the Easter holiday break. US stocks were largely unchanged despite weekly unemployment claims falling to their lowest level in four years. At around 1600 GMT, the blue-chip Dow Jones Industrial average was down 0.07 percent, the tech-rich Nasdaq rose 0.34 percent and the broad-market S&P 500 edged up 0.01 percent. In foreign exchange trading, the euro dropped to $1.3058 from $1.3141 late in New York on Wednesday. The euro also dipped briefly below the 1.20 Swiss franc floor imposed by Switzerland's central bank to curb the soaring local currency, before firming back to 1.2020 francs. The dollar fell to 82.27 Japanese yen from 82.46 yen on Wednesday. A day after the European Central Bank kept its interest rates unchanged, the Bank of England did the same and also voted to maintain its stimulus programme amid mixed signals on the British economy. Financial markets took the news in stride as expectations had been for no change to the rate and traders instead turned to hints of debt crisis contagion on the sovereign bond market for direction. With renewed doubts on the economies of Spain and Italy, the difference between the yield on Spanish bonds and the benchmark debt issued by Germany widened to levels last seen in December, highlighting growing investor caution. France, in the midst of a presidential election in which the state of public finances is a central concern, paid higher rates in an auction of medium- and long-term debt. Spain on Wednesday paid sharply higher rates at a bond auction, its first debt sale since a tough austerity budget last week, in a sign of concerns over its ability to bring its finances under control. That outcome helped push European equities down sharply on Wednesday, with Frankfurt and Paris closing almost 3.0 percent lower and London and Madrid off some 2.0 percent. "Markets were in a very bearish mood (Wednesday) and the sharp decline has almost wiped out all the gains so far this year," said Simon Denham, head of Capital Spreads trading group. "The FTSE also breached various near-term support levels as a bit of panic set in with fears that bonds markets might be setting their sights back on Spain and Italy. "The economic data from the eurozone has been poor and investors feel they may have been walking blindly into the rally, forgetting that an economic recovery cannot be built and sustained on stimulus alone" he added. The US Labor Department reported 357,000 initial jobless claims were filed in the week ending March 31, the lowest level since April 2008. Asian stock markets also dropped owing to renewed eurozone fears. Tokyo closed down 0.53 percent, Sydney shed 0.33 percent and Hong Kong slipped 0.95 percent.