By and  on January 26, 2012

U.S. stock markets closed flat today as an unexpected drop in the number of new home sales December blunted some of the optimism spurred on by the Federal Reserve's pledge to keep interest rates low until at least late 2014.

The S&P Retail Index inched up 0.1 percent, or 0.58 points, to 556.43, as the Dow Jones Industrial Average slipped 0.2 percent, or 22.33 points, to 12,734.63.

J.C. Penney Co. Inc. was the breakaway retail gainer, rising 18.8 percent to $40.72 after the firm said its 2012 earnings would meet or exceed its adjusted 2010 profits of $2.16 a share even with its reinvention under way. Also gaining were The Bon-Ton Stores Inc., up 3.6 percent to $3.75; Oxford Industries Inc., 2.8 percent to $49.68 and Fossil Inc., 2.5 percent to $97.40.

The Census Bureau said new home sales slipped to a seasonally adjusted 307,000 in December, down from 314,000 in November. Economists were looking for a gain to 320,000 new home sales for the month.

Investor sentiment was stronger in Europe.

The four major European stock markets gained more than 1 percent today, with Frankfurt’s DAX rising 1.8 percent to 6,539.85, and Milan’s FTSE MIB, also climbing 1.8 percent to 16,122.42. The CAC 40 in Paris rose 1.5 percent to 3,363.23 while the FTSE 100 advanced 1.2 percent to 5,793.10.

Shares of Carrefour rose 6.5 percent to 18 euros after news emerged of chief executive officer Lars Olofsson’s possible departure. Burberry Group rose 2.7 percent to 13.49 pounds while French Connection climbed 2.7 percent to 0.43 pounds and Mulberry Group advanced 3.4 percent to 17.07 pounds.

The euro traded at $1.31 while the pound traded at $1.57.

British prime minister David Cameron championed the nation’s austerity measures in a speech at the World Economic Forum at Davos.

“This is a time for boldness, not for caution," Cameron said. "In Britain, we’ve had to be bold: We were faced with the biggest budget deficit in our peacetime history, more than 10 percent of our GDP. We had the most leveraged banks, the most indebted households, and the biggest housing boom.”

He said his coalition government’s austerity measures had helped Britain on its way to tackling those problems.

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