European stocks had the biggest weekly decline in four months after oil rebounded and US reports added to concern the world’s largest economy is stalling.
Bayerische Motoren Werke AG, the biggest maker of luxury cars, and Michelin & Cie paced a retreat among automotive companies as May car sales in the US and Germany fell and crude climbed above US$134 a barrel. Bradford & Bingley Plc, the UK’s largest lender to landlords, led banks lower after saying it plans to sell shares at a discount.
Europe’s Dow Jones Stoxx 600 Index tumbled 3.7 percent to 310.29, the steepest drop since the week ended on Feb. 8. The measure is down 15 percent this year as record energy prices, inflation and credit-market losses approaching US$400 billion have weighed on stocks.
“Oil heading for the sky is bad news for autos and airlines,” said Simon Carter, who manages US$3 billion at Aegon Asset Management in Edinburgh. “We need to see demand destruction to put a cap on the price of crude.”
The price of oil rose almost 10 percent in the past two days as demand grew for a hedge against a weakening dollar and Morgan Stanley said prices may reach US$150 within a month because of accelerating Asian consumption amid declining inventories.
European stocks extended declines today after US unemployment last month jumped 5.5 percent, the most since 1986. Economists predicted the jobless rate would rise to 5.1 percent from 5 percent in April, a Bloomberg News survey showed. Average hourly wages gained 0.3 percent from the previous month, more than the 0.2 percent increase predicted by economists.
“What really shocked the market was the rate as well as the average hourly earnings,” Christoph Schmidt, an analyst at Fleischhacker AG in Frankfurt, told Bloomberg Television on Friday.
The European Central Bank and the Bank of England left their benchmark interest rates unchanged on Friday. ECB President Jean-Claude Trichet said officials may raise interest rates next month to combat the fastest inflation in 16 years, sparking a surge in the euro and pushing bond yields to the highest level since 2001.
National benchmarks declined in all 18 western European markets. Germany’s DAX Index fell 4.1 percent, while France’s CAC 40 retreated 4.4 percent. The UK’s FTSE 100 decreased 2.4 percent. The Stoxx 50 slipped 4.2 percent and the Euro Stoxx 50, a measure for the euro region, lost 4.8 percent.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
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PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
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