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Consumers keep their purses closed

Disappointing US consumer spending data also depressed sentiment. Personal spending fell for the second month in succession in June. On a similar theme, retailer Coach moved sharply into reverse as like-for-like sales growth declined to 1.7%, down from 10% year-on-year growth a year earlier. Sector peers Lowe's and Abercrombie & Fitch fell in sympathy.

Humana was another stock heading south as the provider of Medicare benefits cut its 2012 profit forecast.

Archer Daniels's quarterly results failed to hit the target, as the corn processor's fiscal fourth quarter numbers were hit by falling ethanol prices and higher production costs as a result of the recent drought across large parts of the country.

Amongst those companies on the rise were heavyweights such as Pfizer and Apple. Pfizer is set to spin off up to one-fifth of its animal health unit through a stock market flotation. Apple, meanwhile, is expected to launch a new version of its ubiquitous iPhone as early as this September, according to various media reports.

Also gaining traction was Goodyear Tire & Rubber, the US's largest maker of tyres, after second quarter earnings came in ahead of expectations, though the group did lower its full year sales guidance for the second time this year.

Cummins, which makes engines for lorries, was another company which beat analyst forecasts with its earnings, as was steel-maker US Steel.

Financial information provider Dun & Bradstreet was the top performing blue-chip on reports that the group is contemplating putting itself up for sale.

Oil refiner Valero Energy was wanted after reporting a rise in second quarter profits on the back of improved margins. The group unveiled plans to spin off its retail operations.

Manufacturing orders rise, according to the Chicago NAPM

Personal incomes grew by 0.5% month-on-month in June, slightly ahead of the 0.4% expected by the consensus. Worth noting however, personal income and savings data for all three of the past three years have been revised downwards.

In monthly terms consumption figures, on the other hand, came in weaker than forecast.

The Chicago NAPM´s purchasing managers index (PMI) for the month of July has come in ahead of expectations, at 53.7, after 52.9 in the month before. Gains in new orders and order backlogs contributed to the rise.

Economists at Barclays had this to say of the PMI data: “the broader picture mirrors the modest increases that we saw in the Empire State and Philly Fed indices for July, and is consistent with our forecast of a modest rebound in the ISM tomorrow to 50.5. While below the levels seen during Q1, such a print would reaffirm that the pace of growth in manufacturing activity has slowed rather than contracted in recent months.”

The Conference Board´s consumer confidence index for the month of July showed an improvement, rising to 65.9 after 63.7 in June (Consensus: 61.8).

The expectations sub-index improved to 79.1 from 73.4 in June.

Oil inventories in the week ended July 27th fell by 11.6m barrels.

Oil slides to two-week low

West Texas crude for September delivery fell $1.72 to $88.06 a barrel on the NYMEX.

10-year US Treasuries rose by 10/32 dollars, with yields easing to 1.47%.