European stock markets slid sharply yesterday as investors took stock of poor trade data from Japan and talks on Greece’s debt woes while awaiting minutes from the US Fed ’s last policy meeting.
London’s FTSE 100 index of top companies fell by 1.42 per cent to 5,774.2 points. In Frankfurt the DAX 30 dropped by 1.01 per cent to 7,017.75 points, while in Paris the CAC 40 lost 1.47 per cent to 3,461.65 points.
Milan exchange declined 1.10 per cent and Madrid lost 2.70 per cent.
US stocks also fell, with the Dow Jones Industrial Average down 0.40 per cent in midday trading, the broader S&P 500 dropping 0.22 per cent and the tech-rich Nasdaq slipping 0.08 per cent.
“Weaker equity markets across the board in Asia due to disappointing trade data out of Japan and renewed concerns about sharply-falling corporate profits in China are also taking a toll on European equity markets ... with most major indices handing back yesterday’s gains,” said ETX Capital trader Markus Huber.
“With once again very little data out in Europe today the spotlight will remain on Greece.”
The country’s Prime Minister Antonis Samaras yesterday called for more time to make spending cuts and reforms to unlock funds to keep the debt-wracked country afloat, two days before crucial talks in Germany.
“All that we want is a little ‘breathing space’ to revive the economy quickly and raise state income. More time does not automatically mean more money,” Mr Samaras said in an interview with German daily Bild.
Mr Samaras met the head of the Eurogroup of eurozone finance ministers, Jean-Claude Juncker, yesterday before a trip tomorrow to Berlin to meet German Chancellor Angela Merkel. Mr Samaras is then to hold talks with French President François Hollande on Saturday.
Mrs Merkel yesterday dismissed the chances of agreeing to any request by Greece to amend its rescue package during the talks with Mr Samaras.
“We wait for the report of the troika. Then we will decide,” Mrs Merkel said.
As part of a rescue package with its international creditors, known as the troika, Greece has committed to slashing €11.5 billion of spending over the two years from 2013.
Mr Samaras reportedly wants to discuss extending the deadline by two years.
European stock markets had closed higher on Tuesday and the euro jumped back above $1.24 as investors remained hopeful of central bank action over the eurozone crisis and cheered Spain’s latest debt auctions.
With the eurozone still firmly in focus for traders, the euro stood at $1.2462 in afternoon trading yesterday in London, down slightly from $1.2470 late on Tuesday in New York, when the single currency reached a seven-week high at $1.2488.
“Optimism in the eurozone has not been the only driving force behind the better tone in the euro against the dollar recently,” said Jane Foley, senior currency strategist at Rabobank. “This month’s better-than-expected US non-farm payrolls, trade and retail sales data releases have driven optimism about the recovery on the other side of the Atlantic. As a result risk appetite has perked up,” she added.
In Asia, Tokyo fell 0.27 per cent after Japan reported a wider-than-expected trade deficit in July as exports to Europe and Asian neighbours plunged.