LONDON: European stock markets closed lower Tuesday, falling back despite sharp overnight gains in Asia and on Wall Street as concerns over the eurozone and bad news leads kept investors in check.
Dealers said eurozone data continued to be strong, with a surprise rise in French consumer confidence but in Germany, the bloc's powerhouse economy, it looked as though activity might be topping out after a very strong run.
They said the tone started out positive, with solid early gains made after US Federal Reserve chairman Ben Bernanke indicated Monday that the US central bank's very low interest rate regime will remain in place for some time.
His comments drove US stocks up 1.23 percent on Monday and they continued cautiously firmer at the start on Tuesday but then paused as investors digested the latest mixed data and consolidated recent gains.
In London, the benchmark FTSE 100 index of top companies closed down 0.56 percent at 5,869.55 points. In Paris the CAC 40 dropped 0.92 percent to 3,469.59 points but Frankfurt bucked the weaker trend to finish virtually unchanged.
Madrid was off 1.03 percent as investors worried over Spain's public deficit while Milan fell 0.72 percent.
The euro slipped to $1.3337 from $1.3356 in New York late on Monday.
In New York, the blue-chip Dow Jones Industrial Average was flat at around 1600 GMT while the tech-rich Nasdaq Composite edged up 0.15 percent.
US consumer confidence figures came in slightly lower, as expected, but were still positive while the S&P/Case-Shiller index showed home prices in 20 main metropolitan areas kept dropping in January, with no signs of a turnaround despite record low interest rates.
"As housing finds a bottom and the inventory of unsold homes shrinks, the downward pressure on homes abate," said Steven Ricchiuto of Mizuho Securities.
"However, there is still a big foreclosure backlog that will keep prices from firming any time soon."
In London, Simon Denham, head of Capital Spreads trading group, said markets had picked up after losses last week, helped by Bernanke's comments Monday that interest rates would likely remain very low as the economy recovered.
Ben Critchley, a sales trader at IG Index, cautioned that markets may have got too used to getting support from the world's central banks and were hoping for more, even if that carries risks of its own.
"Once again we are through the looking glass, in a world where stocks rise on hopes that US economic data will weaken, since this then raises the probability that the Fed will launch" more stimulus.
"We remain stuck in a world where markets seem unable to cope without the possibility of monetary stimulus, underscoring the fact that the global economy still has some way to go before it is successfully weaned off active central bank intervention," Critchley warned.
In company news, share in bailed-out Royal Bank of Scotland finished up more than 3.0 percent after the BBC said that the British government was in talks to sell up to a third of its stake in the state-rescued lender to Abu Dhabi.
The government, which controls 82 percent of RBS, has been negotiating for months with the emirate's sovereign wealth fund, the report said on Monday.
In Paris, French energy giant Total was lost nearly 6.0 percent after news of a major gas leak problem at a rig in the North Sea, helping to push down the broader market.
Asian stock markets rallied Tuesday after Bernanke's comments, with Tokyo up 2.36 percent, Hong Kong gained 1.83 percent and Sydney rose 0.90 percent.