World stocks hold steady after US housing news

World stock markets were barely changed Tuesday as further upbeat U.S. economic news helped offset profit-taking following the previous session’s big gains.

In Europe, Germany’s DAX closed essentially unchanged at 5,144.60, up an infinitesimal 1.5 point, while France’s CAC-40 index was only 1.45 point lower at 3,378.04. The FTSE 100 index of leading British shares underperformed its European counterparts, ending down 29.17 points, or 0.7 percent, at 4,477.02 as it was dragged down by banking stocks after a major Middle Eastern shareholder in Barclays PLC said it intends to sell part of its stake, potentially taking a big profit on its seven-month investment.

In the U.S., the Dow Jones industrial average was also basically flat at midday New York time, up just 1.1 point at 8,722.54 while the broader Standard & Poor’s 500 index fell 1.07 point to 941.80.

For most of the session, stocks in Europe and the U.S. had been in retreat amid profit-taking following big gains on Monday but a strong housing survey enticed buyers back into the markets.

The National Association of Realtors said the number of pending sales of previously owned U.S. homes rose 6.7 percent in April ? the biggest one-month gain since October 2001.

Despite the modest rally in the wake of the housing data, investors remain cautious about chasing the markets too high, what with key economic releases due this week. Perhaps of most importance will be Friday’s U.S. non-farm payrolls report for May where investors will be looking to see if the recent better than expected U.S. economic data is being translated into more modest job losses.

The news that a leading Barclays shareholder was looking to cash in also stoked concerns that the market rally over the last 10 weeks or so may have been overdone. Barclays, which did not want to raise capital from the British government and opted for Middle Eastern investors instead, saw its share price fall by more than 13 percent. Lloyds Banking Group PLC and Royal Bank of Scotland Group PLC ? both majority-owned by the government ? were dragged lower too.

“Today’s sale of Barclays shares may well act as something of a wake-up call for those sitting on recent short-term gains in the banks ? a reminder that nothing goes up for ever,” said Anthony Grech, market strategist at IG Index.

“It could well prove to be at least a temporary cap in the strength we have seen in this area within the last few months as investors book some profits and wait to see what happens next,” he added.

On Monday, stocks around the world surged after monthly manufacturing surveys stoked hopes that the world economy could be poised for a return to growth in the second half of the year, which helped both the Dow and the S&P to hit their highest levels since January.

Stocks around the world have rallied strongly since mid-March, with some major indexes moving into positive territory for the year. The trigger for the gains has been better than expected economic news, particularly in the U.S., which has fueled an increase in appetite for risk on hopes that the global recession is receding.

Earlier in Asia, Japan’s benchmark Nikkei 225 stock average added 26.56 points, or 0.3 percent, to 9,704.31, setting a fresh eight-month high. Australia’s index added 1.6 percent and Shanghai’s benchmark was up 0.1 percent.

But Hong Kong’s Hang Seng lost 2.7 percent to 18,389.08 after jumping 4 percent the previous session. South Korea’s Kospi gave up early gains to trade down 0.2 percent amid more concerns North Korea is preparing to launch three or four medium-range missiles.

Oil prices were down slightly in electronic trading on the New York Mercantile Exchange with the benchmark contract off 19 cents at $68.39 a barrel ? just shy of the seven-month highs recorded on Monday.

In currencies, the dollar fell to 95.79 yen from 96.39 yen, while the euro rose to $1.4283 from $1.4167.

Copyright 2009 The Associated Press.