European, US stocks hammered by data

European and US stock exchanges fell hard yesterday in the wake of surprisingly weak economic data from the United States, France and Germany that dampened investor confidence.

Analysts also pointed to lingering unease about prospects for Greece, struggling with a debt and deficit crisis and hit again yesterday by a credit downgrade on its four largest banks from ratings agency Fitch.

"The optimism that we had at the start of the year has disappared," said Wilfried Beau of French asset management company Meeschaert Gestion Privee.

"Anxiety is on the rise, with the difficulties in Greece and the overall indebtedness of (other) countries."

Investors yesterday were rattled by news that French household spending fell by 2.7 per cent last month, marked by a sharp drop in car sales, even as consumer prices declined between January and December.

German business confidence was meanwhile reported to have slid for the first time in nearly a year, raising fears that the path to recovery for Europe's top economy will be long and bumpy.

Analysts blamed an unusually harsh winter for the decline in the closely watched Ifo index, which fell to 95.2 points in February from 95.8 in January.

The result wrong-footed analysts surveyed by Dow Jones Newswires who had anticipated a record 11th straight rise.

Later in the day it was reported in Washington that US consumer confidence, according to an index published by the Conference Board, had plunged to 46.0 in February - its lowest reading since April - from 56.5 a month earlier as Americans became more pessimistic about job prospects.

The London FTSE 100 index shed 0.69 per cent to close at 5,315.09 while in Paris the CAC 40 index lost 1.32 per cent to finish. In Frankfurt the Dax fell 1.48 per cent to 5,604.07 points.

Elsewhere there were declines of 0.72 per cent in Brussels, 2.44 per cent in Madrid, 2.21 per cent in Milan and 0.57 per cent on the Swiss Market index.

On Wall Street the Down Jones Industrial Average was down 0.66 per cent at 10,314.61 at mid-day while the Nasdaq composite had fallen 1.29 per cent to 2,213.13.

In London, mining companies, especially sensitive to macroeconomic data, lost ground. ENRC fell 3.76 per cent and Xstrata 3.39 per cent.

In Paris it was the auto sector that came under heavy pressure, with Renault leading the losers with a decline of 4.23 per cent. Tire maker Michelin lost 2.42 per cent on the day.

Germany's second largest bank, Commerzbank, shed 6.47 per cent in Frankfurt after reporting a larger-than-expected fourth quarter net loss.

Earlier in the day cautious profit taking prompted mixed trade in Asian shares, as a stronger yen weighed on exporters in Tokyo and share glut fears stalked Shanghai.

Tokyo closed down 0.47 per cent at 10,352.10 as traders took profits from Monday's strong gains as a stronger yen chipped at exporter share prices.

Shanghai fell 0.69 per cent to 2,982.58, led by financial, energy, steel and metal firms amid lingering tightening concerns and worries over an impending increase in share supply.

However, Hong Kong recovered from earlier losses to close up 1.21 per cent, or 245.73 points, at 20,623.00.