European stocks end mostly down

Europe’s main stock markets mostly slid yesterday, with persistent concerns over the US “fiscal cliff” offsetting German approval of the latest instalment of aid for Greece.

London’s FTSE 100 index of leading companies slid 0.06 per cent to 5,866.82 points and in Paris the CAC 40 dropped 0.33 per cent to 3,557.28.

In Frankfurt the DAX 30 managed to eke out a 0.06 per cent gain to 7,405.5 points. In Madrid the Ibex 35 index fell 0.49 per cent to 7,934.6 points, with shares in bailed-out Bankia plunging by over 25 per cent amid concerns over its restructuring.

The euro rallied to a one-week high at $1.3028, boosted by the German approval, before pulling back to $1.3006, up from $1.2978 in New York late on Thursday.

Gold prices firmed to $1,726 per ounce on the London bullion market, from $1,725 on Thursday.

“Germany’s Bundestag approved Greece’s latest rescue deal with a majority, bolstering the tone somewhat ...” said Ishaq Siddiqi, analyst at ETX Capital trading group.

“That said, persisting worries about the fiscal cliff in the US pressures a sensitive market. Progress, or the lack of it, over US lawmakers reaching a deal dominates headlines and keeps the bulls and the bears fighting for control over direction.”

Germany’s parliament yesterday voted 473 to 100, with 11 abstentions, to approve €43.7 billion in international aid for Greece as it battles against bankruptcy.

In company news, shares in Metro slipped 0.28 per cent to €21.53 after the German retailer agreed to sell its Real supermarket unit in Poland, Rumania, Russia and Ukraine to French rival Auchan for €1.1 billion. The deal covers 91 hypermarkets in the four countries, where Real generated sales of €2.6 billion in 2011 and employs a workforce of 20,000.

In London, Royal Bank of Scotland shares slid 1.27 per cent to 295.20 pence after the lender, which is 81 per cent owned by the taxpayer, announced that the sale of its Indian retail and commercial activities to HSBC had lapsed. It would seek to wind down the Indian operations.

Asian markets mostly climbed on Thursday data showing the US economy grew more than first expected in the third quarter.

Tokyo closed 0.48 per cent higher, Sydney ended up 0.63 per cent, but Seoul finished 0.10 per cent lower.

Hong Kong closed 0.49 per cent higher while Shanghai was up 0.85 per cent.

In the US, investors were increasingly nervous about the approaching fiscal cliff of spending cuts and tax rises, which will be triggered on January 1 unless a cross-party deal is brokered.

“With a month to go before the US is due to topple over the fiscal cliff – $650 billion of spending cuts and tax hikes promising a return to recession – the onus is on the politicians to move the debate on and come up with a deal,” said ING bank economist James Knightley.

“We continue to hear warm words, but there is still a sense that both sides are refusing to budge on several issues. Consequently, we expect this to go to the wire.”

US stocks slid in midday trade amid signs that the negotiations are going nowhere. The Dow Jones Industrial Average was down 0.15 per cent to 13,002.43 points.

The S&P 500 slid 0.15 per cent to 1,413.84 points, while the Nasdaq Composite lost 0.28 per cent at 3,003.71 points.


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