European stocks slid yesterday in anxious trade before Spain announced the cost of bailing out its banks and amid a slew of data that suggested a slowdown in the global economy. London’s benchmark FTSE 100 index closed down 0.99 per cent at 5,566.36 points.
In Frankfurt, the DAX 30 dropped 0.77 per cent to 6,343.13 points, while in Paris the CAC 40 slid 0.39 per cent to 3,114.22 points.
Madrid’s IBEX 35 index gave up 0.33 per cent while Milan bucked the trend to edge 0.14 per cent higher amid renewed talk about having the EU rescue funds buy government bonds.
In foreign exchange deals, the euro fell to $1.2582 from $1.2702 late on Wednesday in New York.
The dollar rose to its highest level against the yen for a month, climbing to 80.33 yen before pulling back to 80.20, still up from 79.56 late on Wednesday in New York.
After European markets closed, Spain’s central bank said that new stress tests showed the country’s banks need between 16 and 62 billion euros in extra capital to stabilise them in the financial crisis.
The deputy governor of the Bank of Spain Fernando Restoy announced the estimates, the result of tests by the US audit firm Oliver Wyman and German firm Roland Berger, at a news conference.
The result was in line with market expectations of a capital shortfall of €60-70 billion.
Ahead of the announcement, Spain showed it could still tap the bond market at a pivotal time by easily raising €2.22 billion in a mixture of two-, three and five-year bonds. But it had to pay soaring rates to lure investors.
Meanwhile, world oil prices fell yesterday, with New York crude briefly going under $80 a barrel, owing to high US supplies and after traders were left disappointed by muted stimulus measures from the Fed. Prices were also lower on persistent weak demand expectations amid the eurozone’s problems and weak growth in the US and China, analysts said.
New York’s main contract, light sweet crude for delivery in August, hit $79.92 – the lowest level for more than eight months. It later pulled back to stand at $80.65 a barrel, down 80 cents compared with Wednesday’s close.
Brent North Sea crude for August shed 94 cents to stand at $91.75 in London midday deals.
Earlier yesterday, it reached an 18-month low at $91 a barrel.
Asian stock markets mostly closed lower on disappointment at the US Federal Reserve’s muted stimulus measures to kickstart the world’s biggest economy, while European concerns also remained in focus.
Adding to selling pressure were preliminary numbers from banking giant HSBC showing China’s manufacturing activity hit a seven-month low in June.