European stock markets retreat

European stock markets fell on Tuesday after beginning the week higher, as traders banked profits amid an absence of data and dearth of major company announcements. London's FTSE 100 index of leading shares dropped 0.39 percent to stand at 6,283.22 points approaching midday trade in the British capital. Frankfurt's DAX 30 slid 0.84 percent to 7,917.01 points and in Paris the CAC 40 shed 0.48 percent to 3,749.21. Milan slipped 0.60 percent and Madrid dipped 0.17 percent. "Financial markets are pulling back Tuesday after registering strong gains in the previous session, driven by a pick-up in manufacturing data out of Europe and the US," said Ishaq Siddiqi, market strategist at ETX Capital traders. "Despite the poor manufacturing reports out of Asia on Monday... sentiment improved as investors took heart in the brighter reports out of the US and Europe." The positive news continued on Tuesday with well-received British construction data and news that the number of Spanish jobless benefit claimants took a record plunge in June as an avalanche of summer jobs opened up. In foreign exchange trading, the euro dropped to $1.3029 from 1.3061 late in New York on Monday. The dollar firmed to 99.77 yen from 99.66 yen on Monday. The dollar edged closer to the 100 yen level on the back of the US figures, in turn helping to push higher the share price levels of Japanese exporters, traders said. Asian stock markets closed mixed overall on Tuesday as a pick-up in US and European manufacturing activity was offset by weakness in China, traders said. In London, the price of gold on the London Bullion Market increased to $1,261.90 an ounce from $1,252.55 on Monday. Gold last week hit a near three-year low point at $1,180.50 an ounce. The precious metal, seen as a safe haven amid economic strains, has been battered by receding worries about higher inflation, upbeat US data, a strong dollar and expectations of an end to the Federal Reserve's quantitative easing (QE) stimulus. Gold lost a quarter of its value in the second quarter, which ended on Friday. That is the heaviest quarterly loss since the early 1970s. In the United States on Monday, the ISM purchasing managers index came in at 50.9 in June, well up from 49.0 in May. Anything above 50 points to growth, while anything below indicates contraction. That came after the Markit Eurozone Composite Purchasing Managers Index rose to a 16-month-high 48.8, from 48.3 in May. While European manufacturing is still shrinking, the latest report suggests a pick-up in even the troubled economies of Italy and Spain. There are some signs also of improvement in the east-central Europe region. Brent Schutte, a market strategist at BMO Private Bank, said the US reading was "pretty good". However, he touched on recent volatility in global markets over the possibility the US Federal Reserve will begin winding down its stimulus programme when the economy shows it is strong enough. "I don't know if bad news is good news or good news is good news," Schutte said. Markets "seem to be in this tug-of-war period".