LONDON: European stock markets on both sides of the Atlantic held steady on Monday (Nov 5) as cautious investors eyed the upcoming US midterm elections, the resumption of Washington's sanctions on Iran and brewing fiscal fears in Italy.
Wall Street was mixed in late morning trading, with the blue-chip Dow and broader S&P 500 both modestly higher, but the Nasdaq fell 1.0 per cent.
In Europe, London's FTSE 100 ended the day with a small gain, while in Paris the CAC 40 was flat and the Frankfurt DAX 30 dipped 0.2 per cent.
Milan shed nearly 0.6 per cent on ongoing worries over Italy's national accounts.
Global oil prices meanwhile came off lows after the US reimposed sanctions on Iran, which is the OPEC cartel's second-biggest player after Saudi Arabia.
Markets.com analyst Neil Wilson said traders are focused "on US midterms on Tuesday, whilst questions over the Italian budget continue to impact risk sentiment."
Eurozone finance ministers urged Italy on Monday to reverse course on its rule-breaking budget amid fears of market turmoil and a return of the debt crisis.
'WORST CASE SCENARIO' FOR MARKETS
Traders are now eyeing Tuesday's US midterm elections, which are seen as a vote on President Donald Trump's performance since taking the White House, with the Democrats looking to take control of the House of Representatives.
FXTM analyst Hussein Sayed said the "market's worst-case scenario would be the Democrats controlling both houses as future fiscal policy trajectory becomes uncertain."
Briefing.com analyst Patrick O'Hare said the election could produce some volatility but the real factors moving the markets are elsewhere.
"Pay attention, but don't let the knee-jerk responses distract you from this important point: the hurdles for the stock market are rising interest rates, the trade tension between the US and China, and the slowdown in foreign economic (activity), all of which are a headwind for earnings growth," he said.
Oil prices rose as Washington reimposed sanctions on Tehran, although it also exempted China, India, Japan and five other countries that still source significant amounts from Iran.
With Iranian banks now cut off from the SWIFT international banking transfer system, doing business with Iran has become more difficult.
"The long awaited sanctions on Iran have set in, and even though they aren't as strict as dealers initially expected, the oil market has been driven higher," said analyst David Madden at CMC Markets UK.
"Given how far oil has fallen in recent weeks, it's no surprise bargain hunters have stepped in."
ASIAN STOCKS STUMBLE
Asian bourses meanwhile fell Monday after Trump's top economics adviser downplayed the chances of a quick deal to end the China-US trade war, taking the steam out of last week's rally.
The US leader had fuelled a surge in the region on Friday by tweeting that he had held positive talks with Chinese President Xi Jinping, before a report said he had even asked officials to draw up a draft bill with an eye on a potential agreement.
But White House economics adviser Larry Kudlow later tempered expectations, telling CNBC "there's no massive movement to deal with trade".
That news sent Wall Street into the red on Friday as investors shrugged off impressive US jobs data.
Key figures around 1630 GMT:
London - FTSE 100: UP 0.1 per cent at 7,103.84 points (close)
Frankfurt - DAX 30: DOWN 0.2 per cent at 11,494.96 (close)
Paris - CAC 40: FLAT at 5,101.39 (close)
Milan - FTSE MIB: DOWN 0.56 per cent at 19,281.03 (close)
EURO STOXX 50: UP 0.1 per cent at 3,218.43
New York - Dow: UP 0.4 per cent at 25,374.43
Tokyo - Nikkei 225: DOWN 1.6 per cent at 21,898.99 (close)
Hong Kong - Hang Seng: DOWN 2.1 per cent at 25,934.39 (close)
Shanghai - Composite: DOWN 0.4 per cent at 2,665.43 (close)
Euro/dollar: UP at US$1.1404 from US$1.1338 at 2100 GMT on Friday
Pound/dollar: UP at US$1.3018 from US$1.2970
Dollar/yen: DOWN at 113.18 yen from 113.20 yen
Oil - Brent Crude: UP US$1.07 at US$73.90 per barrel
Oil - West Texas Intermediate: UP 79 cents at US$63.93 per barrel