European shares drift lower as traders take a breather

A currency trader passes by screens showing the Korea Composite Stock Price Index (KOSPI) and the exchange rate of South Korean won against the U.S. dollar, center right, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, Feb. 19, 2018. Asian markets were higher on Monday following Wall Street gains last week, as market jitters showed signs of easing. Many major markets were closed on holidays. (AP Photo/Ahn Young-joon)
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By The Associated Press

LONDON (AP) — European shares drifted lower Monday as investors paused for breath following a sizeable rally last week. Despite the move lower, there are few signs of the turmoil that gripped stock markets earlier this month. U.S. stock markets are closed for Presidents Day.

In Europe, Germany’s DAX was down 0.3 percent at 12,412 while the FTSE 100 index of leading British shares fell 0.3 percent to 7,276. The CAC 40 in France was 0.2 percent lower at 5.269.

Earlier this month there were real concerns that global stock markets were poised for a sustained period of weakness. However, sentiment has recovered over the past week or so, with many traders adjusting to the altered economic environment.

“So far, global equity markets seem to be adjusting to the prospect of higher inflation, presumably on the basis that increases in corporate pricing power will be positive for earnings rather than of the cost-push kind that dents profit margins and result in a stagflationary economy,” said Neil MacKinnon, global macro strategist at VTB Capital.

Earlier, Asian stocks performed strongly as they caught up with Friday’s further advance, particularly on Wall Street. Japan’s Nikkei 225 jumped 2 percent to 22,149.21. The Tokyo benchmark ended the day just 2.7 percent below where it started 2018, having recouped most of its losses during the recent global rout. South Korea’s Kospi advanced 0.9 percent to 2,442.82. Australia’s S&P/ASX 200 rose 0.6 percent to 5,941.60. Chinese markets were closed for Lunar New Year.

Benchmark U.S. crude rose 46 cents to $62.01 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price international oils, was up 25 cents at $65.09 a barrel in London.

The euro was down 0.1 percent at $1.2397 while the dollar rose 0.2 percent to 106.60 yen.