European stocks declined for a second week amid concern economic growth may be held back by the resurgent sovereign-debt crisis and measures by China to tame inflation.
Basic-resource shares led declines as copper slid on concern demand may weaken. Petroleum Geo-Services ASA fell 11 percent after raising 1.6 billion Norwegian kroner (US$267 million) selling stock. Actelion Ltd jumped 12 percent as Amgen Inc considers a takeover offer for the Swiss drugmaker.
The benchmark STOXX Europe 600 Index fell 0.3 percent this week, the biggest drop this month and extending the 0.7 percent fall from the previous five days.
“The two main concerns are the sovereign-debt crisis in Ireland and the inflation bubble risk in China,” said Philipp Musil, who helps oversee about US$10 billion at Semper Constantia Privatbank AG in Vienna. “Global growth depends on the resolution of those two problems.”
Irish Prime Minister Brian Cowen is edging toward accepting a rescue package that may threaten the country’s low-tax policies and put voters on the hook to repay loans the central bank says may be worth “tens of billions” of euros.
Officials from the EU and the IMF are in Dublin assessing the books of Ireland’s banks. The Irish government estimated rescuing the financial services industry alone might cost as much as 50 billion euros (US$68 billion).
In the UK, a report showed inflation unexpectedly accelerated last month, exceeding the British government’s 3 percent limit and forcing Bank of England Governor Mervyn King to write his fourth letter of explanation to the UK Treasury this year.
Paris-based Credit Agricole SA and Lloyds Banking Group PLC, the UK’s largest mortgage lender, led European banking shares lower, falling 5.1 percent and 4.1 percent, respectively.
CHIP WAR: Tariffs on Taiwanese chips would prompt companies to move their factories, but not necessarily to the US, unleashing a ‘global cross-sector tariff war’ US President Donald Trump would “shoot himself in the foot” if he follows through on his recent pledge to impose higher tariffs on Taiwanese and other foreign semiconductors entering the US, analysts said. Trump’s plans to raise tariffs on chips manufactured in Taiwan to as high as 100 percent would backfire, macroeconomist Henry Wu (吳嘉隆) said. He would “shoot himself in the foot,” Wu said on Saturday, as such economic measures would lead Taiwanese chip suppliers to pass on additional costs to their US clients and consumers, and ultimately cause another wave of inflation. Trump has claimed that Taiwan took up to
SUPPORT: The government said it would help firms deal with supply disruptions, after Trump signed orders imposing tariffs of 25 percent on imports from Canada and Mexico The government pledged to help companies with operations in Mexico, such as iPhone assembler Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), shift production lines and investment if needed to deal with higher US tariffs. The Ministry of Economic Affairs yesterday announced measures to help local firms cope with the US tariff increases on Canada, Mexico, China and other potential areas. The ministry said that it would establish an investment and trade service center in the US to help Taiwanese firms assess the investment environment in different US states, plan supply chain relocation strategies and
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such