European stocks fell this week on investor concern that the US will slip back into recession if lawmakers fail to reach a budget compromise and as the European Commission said the eurozone economy will stagnate next year.
The STOXX 600 dropped 1.7 percent to 270.27 this week as investors focused on the US’ “fiscal cliff” after US President Barack Obama was re-elected. The benchmark measure has still rallied 16 percent from this year’s low on June 4 as European Central Bank (ECB) President Mario Draghi pledged to preserve the euro and the US Federal Reserve opted for a third round of asset purchases.
The ECB on Thursday left its benchmark interest rate at a record low of 0.75 percent, as predicted by all but one of 63 economists surveyed by Bloomberg News. The Bank of England held its key rate at 0.5 percent.
National benchmark indeces declined in 15 of the 18 Western European markets. France’s CAC 40 Index dropped 2 percent and the UK’s FTSE 100 Index lost 1.7 percent, while Germany’s DAX Index slid 2.7 percent.
The European Commission on Wednesday forecast that the 17-nation euro economy will expand 0.1 percent next year, down from a May forecast of 1 percent. It cut the estimate for Germany to 0.8 percent from 1.7 percent.
“With each passing day, there is more and more confirmation of a recession,” Porta said.
Greek Prime Minister Antonis Samaras obtained lawmakers’ approval for a package of austerity measures needed to release further financial aid from the EU.
However, eurozone finance ministers will not make a decision on releasing further aid for Greece when they meet in Brussels on Monday, an unidentified EU official said, adding that Nov. 26 is a possible date for the decision.
Balfour Beatty PLC, the UK’s largest construction company, plunged 21 percent after saying the outlook for profit margins has faded.
PostNL NV sank 20 percent after saying full-year underlying cash operating income would be in the bottom half of its forecast. Alcatel-Lucent SA surged 16 percent, for the best performance in the STOXX Europe 600 Index.