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.
CLOSE ENCOUNTERS: Several of the PLA fighter jets that crossed the median line of the Strait came within 68km of Hsinchu, drawing warnings from Taiwan, the ministry said At least 18 Chinese military aircraft yesterday flew into the nation’s air defense identification zone (ADIZ) on the second day of a US delegation’s visit, the Ministry of National Defense said, adding that the military responded by deploying an air defense missile system to monitor their activities. A delegation led by US Undersecretary of State for Economic Growth, Energy and the Environment Keith Krach on Thursday started a three-day visit to Taiwan. The ministry from Thursday started publicizing the actions of the Chinese People’s Liberation Army (PLA) in Taiwan’s ADIZ on its Web site and Twitter. According to ministry reports, 18 PLA aircraft
TWO CASES: The five allegedly conspired with conglomerates, threatening the nation’s governance and subverting the rules of ethical conduct, a deputy chief prosecutor said Taipei prosecutors yesterday charged three legislators and one former lawmaker with contravening the Anti-Corruption Act (貪污治罪條例) in a case linked to former Pacific Distribution Investment Co (太平洋流通) chairman Lee Heng-lung’s (李恆隆) battle with the Far Eastern Group (遠東集團) over ownership of the Pacific SOGO Department Store (太平洋崇光百貨) chain, while independent Legislator Chao Cheng-yu (趙正宇) was indicted in a separate case involving two funeral services companies and a plot of land in a national park. Chinese Nationalist Party (KMT) legislators Chen Chao-ming (陳超明) and Sufin Siluko (廖國棟), Democratic Progressive Party (DPP) Legislator Su Chen-ching (蘇震清) and former New Power Party legislator
PENGHU INSPECTION: Taiwan cannot let its enemies strut around in its airspace, Tsai said, one day after a Chinese spokesman denied a median line exists in the Taiwan Strait Following China’s assertion on Monday that there is no “median line” in the Taiwan Strait, President Tsai Ing-wen (蔡英文) yesterday pledged to defend the nation’s airspace during a visit to an air force base in Penghu, saying that Taiwan cannot allow others to flex their military muscle in its territorial airspace. Tsai praised the “heroic performance” of the pilots of the Indigenous Defense Fighters who have been intercepting Chinese People’s Liberation Army Air Force planes in recent days. “I have a lot of confidence in you. As soldiers of the Republic of China [ROC], how could we let enemies strut
Swedish Member of Parliament Hampus Hagman is pushing for changing the name of the nation’s trade office in Taipei to signal improved relations with “Asia’s perhaps foremost democracy.” Hagman on Wednesday last week proposed renaming the Swedish Trade and Invest Council to “Sweden’s Office in Taipei,” following similar changes by other nations. The Swedish Trade and Invest Council, part of Business Sweden, is owned by the Swedish government and Swedish industry. Taiwan and Sweden share important values such as respect for democracy, human rights, the rule of law and freedom of speech, Hagman said in the motion, adding that the two nations