Sun, Jan 02, 2011 - Page 10 News List

European markets post weekly drop, trim full-year rally

Bloomberg

European stocks posted the biggest weekly drop since July, trimming the benchmark STOXX Europe 600 Index’s second straight annual gain, amid speculation the rally may have overshot the outlook for earnings and the economy.

Automakers Daimler AG and Volkswagen AG tumbled more than 5 percent as China, the world’s largest car market, raised interest rates for the second time in just over two months. UniCredit SpA, Italy’s biggest lender, led a decline in banks.

The STOXX 600 sank 1.9 percent to 276.14 this past week, paring this month’s gain to 5.5 percent. The gauge surged 8.8 percent last year as companies reported increased profits and the US Federal Reserve unveiled US$600 billion of additional bond purchases to support the economy.

“Light volumes have exacerbated falls and one should not read too much into this. The majority of traders and volumes are likely to return next week, in the New Year,” said Joshua Raymond, a market strategist at City Index Ltd in London.

National benchmark indexes declined in 14 of the 18 western European markets this week. The UK’s FTSE 100 lost 1.8 percent and Germany’s DAX fell 2 percent, paring the gauges’ gains for last year. Denmark’s OMX Copenhagen 20, which has jumped 36 percent this year, slipped 0.4 percent this week. Greece’s ASE slid 2.1 percent, extending its annual plunge to 36 percent.

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