European market started the week on a steady footing as most indices spent the majority of the day in positive territory despite the bearish start to the week for Asian equities. London opened 0.4% higher but early gains were quickly reversed after UK services PMI came in below expectations, registering a reading of 58.8 in December against 60.3 expected by analysts polled by Bloomberg. Direction, in a relatively thin trading session was again reversed as losses were slowly recovered throughout the remainder of the session but the index struggled to recover any of its early gains, finally closing marginally lower.
Spain’s IBEX gained 1% throughout the day as its service sector grew at its fastest pace since July 2007. The Markit PMI reading rose to 54.2 in December from 51.5 the previous month, coming in significantly better than the estimated reading of 51.6 according to Bloomberg. Germany’s DAX index spent the a large part of the day in positive territory trading as much as 0.35% higher by 12pm, however, a weaker than expected US ISM non-manufacturing reading in December, which came in at 53 against a median estimate of 54.7, dragged European equities lower, erasing much of the sessions early gains leading to a 0.1% decline throughout the day.
The weaker ISM non-manufacturing reading which slowed for a second consecutive month suggests that the tentative recovery which has seen a sharp rebound in employment and manufacturing activity is struggling to benefit all sectors of the economy evenly. At the time of writing both the S&P 500 and DJIA were trading 0.3% lower.