It’s one of the first rules in the book of mainstream economic wisdom: a country’s economy is the thermometer which “reads” its stock market’s temperature. If financial conditions are heating up, stocks rise; if they are cooling down, stocks fall. Were it so simple — millionaires wouldn’t make up a measly .15% of the global population.

Obviously, there’s a major flaw with this logic; namely, it isn’t true. Time and again, stock prices smolder to near boiling even as economic growth chills to the bone. (The opposite also holds: Stock prices cool down even as the economy is on fire.)

Take, for instance, Germany’s main stock index, the DAX 30. On August 13, Europe’s number one economy reported a .3% rise in gross domestic product (GDP) — Germany’s first quarter of growth since January 2008. Soon after, the …

European shares touched a 10-month high on Friday on optimism for a global economic recovery and with Nokia and results from U.S. bellwethers boosting the technology sector.

The FTSEurofirst 300 <.FTEU3> index of top European shares rose 1 percent to 978.34 points. Over the week, the index climbed 1.2 percent, its sixth weekly gain in the last seven weeks.

The European benchmark index is up more than 51 percent from its lifetime low of March 9, as investors have become more confident on the prospects of economic recovery.

“Things look good for the time being, but the higher we go the more we could be setting ourselves up for a disappointment,” said Andy Lynch, a fund manager at Schroders.

“The world economy is doing well, French and German GDP are positive, but that’s not surprising given the amount of stimulus being pumped into the market. I have a concern about what happens when the sugar

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European shares slipped back from a 10-month closing high on Wednesday, as investors took profits, even as German and U.S. economic data continued to point to recovery.

The pan-European FTSEurofirst 300 <.FTEU3> index of top shares fell 0.5 percent to close at 973.92 points, breaking a four-day winning streak, and having hit its highest close since early October on Tuesday.

The European benchmark index is still up 50.9 percent from its lifetime low of March 9, as investors have become more confident on the prospects of recovery.

“The market has come a long way, and the economics are still supportive,” said Georgina Taylor, equity strategist, Legal & General Investment Management.

“We’re just seeing a little profit taking. Nothing has been derailed. Housing data is improving. The only area of concern is consumer spending.”

Energy companies were the biggest drag on the index, with crude prices down more than 1 percent to just above $71 a barrel,

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(Gold is the August contract on the NY Mercantile Exchange. Silver, copper and oil are the September contracts.)

NEW YORK - Wall Street ended modestly lower on Wednesday as the market consolidated recent gains, largely shrugging off a plunge in Chinese shares and weaker-than-expected data from the US factory sector. The Dow Jones Industrial Average shed 26 points, 0.29 per cent, to 9070.72. The Nasdaq composite dipped 7.75 points, 0.39 per cent, to 1967.76 and the broad-market Standard & Poor’s 500 drifted down 4.47 points, or 0.46 per cent, to a close of 975.15.

LONDON - European stock markets, resisting a slide on Wall Street, advanced, drawing strength from corporate earnings results. The London FTSE 100 index gained 18.69, or 0.41 per cent, to close at 4547.53 points.

FRANKFURT - Pharmaceutical group Bayer surged 5.44 per cent to 42.23 euros after reporting results that beat expectations. Despite a third

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(Gold is the August contract on the NY Mercantile Exchange. Silver, copper and oil are the September contracts.)

NEW YORK - US stocks finished narrowly mixed on Tuesday as the market’s strong momentum from a hefty two-week rally helped overcome an early wave of profit-taking. Markets reacted to a weaker-than-expected survey on consumer confidence that was mitigated by positive news from the housing sector and generally strong corporate news. The Dow Jones Industrial Average drifted down 11.79 points, or 0.13 per cent, to settle at 9096.72, retreating modestly from a two-week surge of nearly 12 per cent. The Nasdaq composite meanwhile rose 7.62 points, 0.39 per cent, to 1975.51 in a late recovery, while the broad-market Standard & Poor’s 500 index dipped 2.56 points, 0.26 per cent, to settle at 979.62.

LONDON - European stock markets closed with losses, with sentiment dented by profit-taking and a disappointing reading

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MORNING MARKET REPORT

Gold is the August contract on the NY Mercantile Exchange. Silver, copper and oil are the September contracts.)

NEW YORK - Wall Street shares drifted to a mostly higher close on Friday as investors mulled disappointing earnings reports. The Dow Jones Industrial Average rose 23.95 points, 0.26 per cent, to finish at 9093.24. The technology-heavy Nasdaq composite dropped 7.64 points, or 0.39 per cent, to 1965.96, snapping a 12-session winning streak. The broad-market Standard & Poor’s 500 index added 2.97 points, or 0.3 per cent, to close at 979.26.

LONDON - European stock exchanges closed narrowly mixed on Friday as a near two-week rally ran into profit-taking ahead of the weekend. In London, the FTSE 100 index of leading shares was up 16.81 points, or 0.4 per cent, at 4576.61 points.

FRANKFURT - The Dax fell 17.92 points, or 0.34 per cent,

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European shares were down in afternoon trade today, Wednesday, with banks leading the decline after quarterly results from U.S. banks Morgan Stanley and Wells Fargo disappointed investors.

By 1306 GMT, the pan-European FTSEurofirst 300 <.FTEU3> index of top shares was down 0.4 percent at 884.79 points after trading between 879.97 and 888.23 points.

“Morgan Stanley’s operating loss per share looks on the high side, compared to others in the sector. I think Morgan Stanley’s paying back public aid has distorted results; it is not known if this has been incorporated into analysts’ expectations of the results,” said Heino Ruland, strategist at Ruland Research.

Bank shares took the most off the index after Morgan Stanley reported its third consecutive quarterly loss and Wells Fargo reported rising credit losses.

“The continuing decline in asset quality is a worry, and whilst they are making money in other areas it just goes to show that conditions in the consumer segment

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German business confidence fell in February to the lowest level in more than 18 years as business managers worried the government’s stimulus program and interest-rate cuts from the European Central Bank won’t be enough to revive the economy. The Ifo institute's business climate index, which is based on a survey of 7,000 executives, fell to 82.6 from 83 in January. That’s the worst reading since the institute started collecting data for a reunified Germany in 1991.br /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/SaPEc1iyAxI/AAAAAAAAMww/X543MarXK3o/s1600-h/german+IFO.png"img id="BLOGGER_PHOTO_ID_5306300785660920594" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 245px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SaPEc1iyAxI/AAAAAAAAMww/X543MarXK3o/s400/german+IFO.png" border="0" //abr /br /br /The German parliament agreed last week to more than double the government’s fiscal stimulus to about 80 billion euros - or around 1.6 percent of German gross domestic product - to try to reduce the impact of what is now the country’s worst recession since World War II.br ...

The year 2008 was for the global equity markets the worst in history. Capital outflow reached record 14 trillion dollars. The crisis of the financial system and the worst recession since 1970, froze investor confidence. MSCI index of global shares in the year fell by a record 44%.br /br /One of the worst performance posted stock market in Russia. Benchmark RTS Index closed the year 72% lower. The second worst result in the world has seen China's stock index, the SSE Composite lost a record 65% after the boom in 2006 and 2007 brought the growth of over 300%.br /br /In the U.S., the Dow Jones index ended the last trading day a profit of 2.2% over the year but lost 34% of which was the worst loss since the Great Depression in 1931. Only two titles, retailers Wal-Mart Stores (WMT) and Mc Donalds (MCD), closed the ...

Euro gains, then loses, then gains…  Inflation and Commodities…  The euro turns 10!  Risk Aversion remains but is waning… And Now… Today’s Pfennig! Remember those Wild Swings I talked about yesterday? The Wild Swings that could be a result of thin volumes in this the second week of Christmas. Well… We witnessed them in earnest yesterday! As I signed off yesterday, I told you that the euro had rallied 2 whole figures to 1.43 and change. Well, that rally dissipated throughout the morning, and by late in the day the single unit was 1.39 and change… WOW! Now that’s a Wild Swing!

You can point to profit taking as the reason for the move,

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