North American markets end day with gains

North American markets closed Friday with gains, even as investors tried to dissect mixed economic signals on the U.S. economy.

In Toronto, the S&P/TSX composite index eked out a gain of 2.40 points, ending at 12,542.20, up 3.1 per cent from the close a week earlier.  

In New York, the Dow Jones industrial average retreated from earlier gains of more than 200 points but still closed up 125.71 points, or 1.1 per cent, at 11,269.02, ending a week of wild swings down just 1.5 per cent from the close on Friday, Aug, 5.

A U.S. government report said consumers spent more on autos, furniture and gasoline in July, pushing up retail sales by the largest amount in four months. But a survey on consumers' feelings  about their personal finances and the economy reached an almost 30-year low.

The wild market swings that had so rattled investors in the past week had not reappeared by mid-afternoon Friday.    

September crude futures finished the day lower by 34 cents at $85.38 US a barrel.

December gold closed down $8.90 US an ounce at $1,742.60, driving the S&P/TSX gold index 1.7 per cent lower.

The loonie closed down 0.24 of a cent at 100.94 cents US.

The roller-coaster Dow:

Monday: Down 634.76

Tuesday: Up 429.92

Wednesday:  Down 519.83

Thursday:  Up 423.37

On Thursday, the Dow rose 423 points and Toronto's benchmark index finished 341 points higher. Both markets have been the scene of unusually high volatility for more than a week.    

In Europe, stock markets also closed higher as investors assessed the impact of a short-selling ban on financial shares in four eurozone countries. Later in the day, the Italian government approved a new program of austerity cuts.

London's FTSE 100 was up three per cent at 5,320 points, while Germany's DAX was 3.5 per cent higher at 5,998. The CAC-40 in France was four per cent higher at 3,214.

European regulators impose short-selling bans

The gains in Europe came after regulators in France, Italy, Spain and Belgium imposed temporary bans on the short-selling of financial shares late Thursday, after days of wild volatility in bank shares that regulators said was due in large part to rumours that French banks were in financial difficulty.  

However, analysts had serious doubts about whether the short-selling ban would really calm the markets since many experts say a similar move in 2008 actually made investors more skittish.

"With deteriorating investor confidence in eurozone debt likely to continue driving reduced investor confidence in European banks' ability to withstand the fallout from the eurozone debt crisis; we doubt that downward pressure on European financials will now dissipate," said Lee Hardman, an analyst at Bank of Tokyo-Mitsubishi UFJ.

The gains in Europe came despite figures showing France's economy unexpectedly ground to a halt in the second quarter as consumers dramatically scaled back on spending and the country's exporters struggled.

The stalling of the French economy  was likely to worsen concerns over the euro zone in general, where the three bailout countries of Greece, Ireland and Portugal are in recession and Italy and Spain struggle with lacklustre growth.

France is already facing speculation that it may soon lose its triple-A credit rating due to its high debt load.