European stocks slide on Asian woes

Europe’s main stock markets slid yesterday as poor European and Chinese manufacturing data eclipsed news of the Spanish Government’s successful long-term bond auction, dealers said.

London’s FTSE 100 index of top companies dropped 0.57 per cent to 5,854.64 points, while in Paris the CAC 40 shed 0.62 per cent to 3,509.92 points and in Frankfurt the Dax 30 ended the day down just 0.02 per cent to 7,389.49 points.

Milan dropped 1.68 per cent Madrid’s IBEX 35 sank 0.95 per cent as the Spanish government’s successful bond auction failed to dispel market fears that the debt-plagued eurozone nation was heading for a bailout.

Spain borrowed €4.799 billion in bond auctions yesterday, paying sharply reduced interest rates for the critical long maturity of 10 years.

The European single currency dropped to $1.2946 from $1.3049 late in New York on Wednesday, pressured by weak eurozone business activity data while the greenback was also boosted by safe-haven demand, traders said.

The dollar dipped against the yen, buying 78.27 yen compared to 78.36 on Wednesday

Gold slid to $1,758.50 at London’s evening fixing from $1,766.75 on Wednesday evening.

Spain, fighting to avoid having to seek rescue funding, placed its 10-year bonds at an average rate of 5.666 per cent, down from 6.647 per cent at the last such auction on August 2. A rate below six per cent is considered important for Spain, since borrowing costs above this level are seen as unsustainably expensive.

Borrowing rates for eurozone countries in trouble have fallen sharply on the market for existing government debt since the European Central Bank said on September 6 that it would buy unlimited quantities of eurozone debt.

But the ECB said that such help would depend on the countries concerned appealing for rescue funding and accepting consequent conditions for structural reforms, which Spain is reluctant to do.

Analysts said yesterday’s bond auction would ease the pressure on the nation’s Prime Minister Mariano Rajoy – for the time being.

US stocks also traded lower on the weak Chinese manufacturing data.

In midday trade, the Dow Jones Industrial Average was down 0.10 per cent to 13,564.42 points.

The S&P 500-stock index lost 0.29 per cent to 1,456.85 points, while the tech-heavy Nasdaq dropped 0.36 per cent to 3,171.26 points.