LONDON: European equities fell yesterday as investors digested gloomy eurozone data showing anaemic economic growth for the first quarter of the year.
London’s benchmark FTSE 100 index gave up 0.55 percent to close at 6,840.089 points as investors considered a £3.7bn ($6.2bn) merger of retail giants Carphone Warehouse and Dixons as defensive.
Frankfurt’s DAX 30 lost 1.0 percent to 9,656.05 points despite impressive German growth, while the CAC 40 in Paris shed 1.25 percent to 4,444.93 points.
Italian stocks took more of a battering, with the Milan index plunging 3.61 percent. All of its stocks ended the day down, with the Mediaset business empire of former prime minister Silvio Berlusconi leading the plunge with a fall of 8.5 percent to ¤3.17.
In foreign exchange activity, the European single currency sank to $1.3648 — the lowest level in two and a half months. It later stood at $1.3716, up marginally from $1.3713 late in New York on Wednesday.
US markets also tumbled after snapping a five-day winning streak for the Dow on Wednesday that included three straight record closings.
Analyst Jasper Lawler at CMC Markets UK said “mixed corporate earnings and poor Eurozone economic growth took their toll and caused an afternoon selloff in European equities.”
Gross domestic product across the 18-nation eurozone grew by just 0.2 percent in the three months to March, the Eurostat data agency revealed, dashing market expectations for 0.4-percent expansion.
However, the German economy sprinted ahead, seeing growth double to 0.8 percent in the first quarter from the previous three months, beating market forecasts.
Gross domestic product (GDP) in Italy, the third-biggest eurozone economy, shrank by 0.1 percent; and in Portugal, about to emerge from a bailout corset, output contracted by 0.7 percent.
In a separate data release, Eurostat confirmed that eurozone inflation rose to 0.7 percent in April. That was up from the 0.5 percent reported in March, but still a long way from the European Central Bank’s 2.0-percent target. The poor results caused borrowing rates for weaker eurozone states to jump.
The rate of return to investors on 10-year Italian bonds in the secondary market climbed to 3.103 percent from 2.911 percent late on Wednesday. The yield on Spanish bonds jumped to 3.020 percent from 2.857 percent.
Meanwhile, the euro slid to 81.69 pence from 81.78 pence on Wednesday, while the British pound rose to $1.6789 from $1.6769. The price of gold declined to $1,299 an ounce on the London Bullion Market from $1,305.25 on Wednesday.
Wall Street also slumped lower after concerns of a US slowdown triggered a decline in the country’s benchmark indexes on Wednesday. In midday trading the Dow Jones Industrial Average fell 1.17 percent to 16,419.87 points. The broad-based S&P 500 shed 1.37 percent to 1,862.69, while the tech-rich Nasdaq Composite Index gave up 1.46 percent to 4,040.93.
Asian markets were mixed. Tokyo slipped 0.75 percent, or 107.55 points, to finish at 14,298.21, Sydney added 0.26 percent, or 14.3 points, to 5510.8 and Seoul was flat, edging down 0.63 points to 2,010.20.
AFP
