Sun, May 06, 2012 - Page 10 News List

European stocks fall as Spain enters a recession


European stocks posted their biggest weekly drop since March as Spain entered a recession, a report showed the US economy added fewer workers than expected and investors awaited elections in France and Greece this weekend.

The STOXX Europe 600 Index retreated 2.4 percent to 253 this week, its biggest slide in six weeks. That compares with a gain of 0.5 percent last week.

The gauge has lost 7.1 percent since this year’s high on March 16 amid renewed concern that the euro area has yet to contain its sovereign-debt crisis.

“The closely watched non-farm payrolls report came in significantly below expectations,” said Chris Beauchamp, a market analyst at IG Index in London. “The outlook does not look particularly promising.”

National benchmark indexes fell in 15 of the 18 western European markets this week. The UK’s FTSE 100 Index and France’s CAC 40 lost 2.1 percent. Germany’s DAX dropped 2.6 percent for its biggest weekly retreat this year.

Spain’s IBEX 35 sank 2.2 percent as a report showed that Europe’s fifth-largest economy has entered its second recession since 2008. The Mediterranean nation’s GDP contracted 0.3 percent in the first quarter, after shrinking 0.3 percent in the final quarter of last year.

In the US, a Labor Department report showed that the world’s largest economy added 115,000 workers last month, the smallest number in six months. The unemployment rate unexpectedly declined to a three-year low of 8.1 percent as Americans left the labor force. European stocks fell as investors speculated that the slowdown in hiring will restrain the wage growth needed to fuel consumer spending, which accounts for 70 percent of economic activity in the US.

In the euro area, polls show the French will probably elect their first Socialist president since 1995, while recession-weary Greeks will pick a new government. Local elections will test Italy’s political pulse, and voters in a northern state may deal a symbolic blow to German Chancellor Angela Merkel’s coalition.

“It still looks as if Francois Hollande will end up owning the keys of the Elysee Palace come Sunday night,” Beauchamp said.

“In Greece, the situation is much less clear. Uncertainty could well persist further into next week about the new makeup of the government in Athens, which would raise the possibility of more losses for markets,” he said.

Unemployment in the 17 nations that use the euro rose to a 15-year high and manufacturing contracted for a ninth month, reports on Wednesday showed.

The jobless rate rose to 10.9 percent in March from 10.8 percent in February, the EU’s statistics office in Luxembourg said. That’s the highest since April 1997, according to Bloomberg News data.

This story has been viewed 3349 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top