European stock markets closed lower yesterday after a mixed US employment report and the G20 summit did little to help ease investor concerns over the risks the eurozone debt crisis poses for growth. Dealers said sentiment got an early boost after Athens ditched plans for a referendum on its latest EU bailout package but the issue effectively hijacked the G20 summit in France which had been looked to for progress on wider problems facing the global economy.
They said the markets were struggling to keep up with the twists and turns of the debt crisis, with additional uncertainty created by a Greek. The US data, showing lower-than-expected job creation but a fall in the headline unemployment rate to 9.0 per cent, was not enough to shake the markets out of the doldrums but did contain some encouraging elements, they added.
In London, the FTSE-100 index of top companies closed down 0.33 per cent at 5,527.16 points but losses elsewhere were substantial – the Paris CAC-40 fell 2.25 per cent to 3,123.55 points and in Frankfurt the DAX 30 tumbled 2.72 per cent to 5,966.16 points.
Milan, put in the firing line as the IMF and EU said they would monitor the country’s economic reform efforts to ensure Rome honoured its commitments, lost 2.66 per cent and Madrid shed 1.33 per cent.
The euro fell to $1.3747 from $1.3808 in New York late Thursday while the dollar rose to 78.24 yen from 78.07 yen. In New York, the blue chip Dow Jones Industrial Average lost 1.25 percent and the tech-heavy Nasdaq Composite shed 0.91 per cent at just before 1700 GMT.
“Europe remains in focus, with political uncertainty in Greece ahead of its confidence vote fostering concerns about the implementation of the last week’s eurozone bailout plan,” Charles Schwab analysts said. In a mixed October jobs report, the US unemployment rate unexpectedly slipped to 9.0 per cent from 9.1 per cent the month before but the number of net new jobs disappointed at 80,000.
“The synopsis of the October report is that it matches a low-growth environment. It also reveals, as have past reports, that there is still much work to be done to improve the labour market,” said Patrick O’Hare at Briefing.com.
CMC Markets analyst Michael Hewson said the G20 summit “continues to be overshadowed by events in Athens, as leaders look at ways of boosting the funds of the IMF while reiterating an action plan for global growth.
“The situation in Greece continues to act as a backdrop to markets,” he added.
As the G20 put the finishing touches to a closing summit statement designed to kickstart global growth and rebalance trade, senior European Union officials said Italy’s economy would be put under IMF oversight.
In Asian trade earlier yesterday, markets rose as they welcomed news that the Greek referendum was to be dropped. (AFP)