Sun, Aug 07, 2011 - Page 10 News List

STOXX Europe 600 has biggest weekly drop in 33 months


European stocks posted their biggest weekly loss since November 2008, becoming the first major region to enter a market correction, as concern escalated that the US’ economic recovery is stalling.

The STOXX Europe 600 Index tumbled 9.9 percent to 238.88 this past week, the gauge’s lowest level in 13 months. The measure has declined 18 percent from this year’s high on Feb. 17 amid mounting speculation that Europe will fail to contain its sovereign debt crisis and that the economic recovery is faltering in the US.

The index this week extended losses from this year’s peak to more than 10 percent, a retreat known as a correction.

“Fears of an extension of the debt crisis to Spain and Italy have coupled with the US’ own debt problem and, in the last few days, the additional element of worsening of the economic statistics,” said Karim Bertoni, who helps oversee US$29 billion at Banque SYZ & Co in Geneva. “If data continues to slow down, then markets will be weak.”

The VStoxx Index, which measures the cost of protecting against a decline in shares on the Euro STOXX 50 Index, surged 42 percent this week to its highest level since June last year.

National benchmark indexes retreated in all 18 Western European markets. France’s CAC 40 Index slid 11 percent, the UK’s FTSE 100 Index dropped 9.8 percent, while Germany’s DAX declined 13 percent.

The European Central Bank (ECB) left interest rates unchanged on Thursday, as economic growth slows and the region’s debt crisis spreads to Italy and Spain. Bank officials kept the benchmark rate at 1.5 percent.

ECB President Jean-Claude Trichet signaled at a press conference in Frankfurt that the central bank has resumed bond purchases.

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