Europe’s main stock markets fell yesterday with traders on edge about global growth prospects, as eurozone finance ministers trying to get on top of the region’s debt crisis established a landmark financial firewall in Luxembourg.
London’s benchmark FTSE 100 index of top companies slid 0.50 per cent to stand at 5,841.74 points, Frankfurt’s DAX 30 shed 1.44 per cent to 7,291.21 points and in Paris the CAC 40 was 1.46 per cent lower at 3,406.53.
In foreign exchange activity, the euro dipped to $1.2970 from $1.3031 late in New York yesterday.
In New York, US stocks also gave up some of the gains recorded last week. In midday trades, the blue-chip Dow Jones Industrial Average was down 0.32 per cent, the broad-based S&P 500 had dropped 0.50 per cent and the tech-rich Nasdaq Composite fell 0.88 per cent.
“Whether the market reorients its thinking from central bank support to the weakening fundamental picture remains to be seen,” said Patrick O’Hare of Briefing.com.
“The third quarter earnings reporting season, which begins this week with Alcoa’s report after the close on Tuesday, has the potential to shift the market’s perspective.”
Back in Europe, the eurozone launched its much-awaited €500-billion rescue fund, a positive backdrop for finance ministers trying to settle Greece’s tortuous debt bailout as Spain worked to avoid having to seek a rescue of its own.
Finance ministers of the 17-nation euro bloc met just 10 days before the EU’s 27 leaders were to gather in Brussels, with recent market calm giving them breathing room after months of turmoil and anxiety over Spain’s future.
The European Stability Mechanism is a major step forward in the eurozone’s defences against a debt crisis that has helped push the bloc back into recession.
At the same time, the economic landscape is not encouraging however, with the most recent data showing Europe back in recession and threatening to slip further into the doldrums.
EU officials on Friday said they do not expect Greece to get the green light, either in Luxembourg or at the October 18-19 Brussels summit, for the resumption of its drip-feed bailout after differences with its EU, European Central Bank and International Monetary Fund creditors.
Asian stock markets meanwhile closed lower yesterday, hit by growth forecast downgrades from the World Bank and ongoing eurozone debt crisis fears.
Hong Kong fell 0.89 per cent, Sydney lost 0.28 per cent and Seoul shed 0.67 per cent. Tokyo was closed for a public holiday.
The World Bank slashed its 2012 growth forecast for developing countries in East Asia and the Pacific to 7.2 per cent, dragged down by China’s worst economic performance in 13 years.
It said China’s economy would grow just 7.7 per cent this year, down from 9.3 per cent in 2011 and its slowest rate since 1999, but added that stimulus measures would help push it back above the crucial eight per cent mark in 2013.
In the US, Labour Department figures last Friday put the official US jobless rate at 7.8 per cent in September, the lowest level since President Barack Obama took office in 2009.