Arab Today, arab today european stocks hit by german downgrade rumours
Last Updated : GMT 23:12:04
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European stocks hit by German downgrade rumours

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Arab Today, arab today European stocks hit by German downgrade rumours

Brussels - AFP

European stock markets fell sharply on Wednesday, hit by comments by the Bundesbank chief that the debt crisis could take a decade to overcome and speculation swirled over a potential credit rating downgrade. Frankfurt's DAX 30 fell 2.34 percent to 7,503.03 points, while in Paris the CAC 40 dropped 2.35 percent to a four month low of 3,599.23 points, and London's FTSE 100 shed 0.96 percent to 6,244.21 points. "Equity markets took a sharp leg lower in Europe, giving back early gains as rumours of a German downgrade sparked heavy selling," said Matt Basi, head of sales trading at CMC Markets UK. "The market reacting so drastically to idle chatter of this nature is probably less indicative of any belief in the gossip than of the general nervousness amongst traders, as the bleak macro backdrop combines with wild commodity swings, acts of terrorism and unravelling geopolitical situations in North Korea and Israel to undermine investor confidence." Comments from Bundesbank chief Jens Weidmann that Europe's recovery could well take a decade, also hit sentiment in the afternoon session. European car sales dopping to near a 20 year low, with Germany's auto market in particular suffering, also added to the negative mood. "Overcoming the crisis and the crisis effects will remain a challenge over the next decade," Weidmann -- who also sits on the European Central Bank's governing council -- told the Wall Street Journal. In foreign exchange activity, the European single currency fell to $1.3050, from $1.3174 late in New York on Tuesday, after the Bundesbank's Weidmann said that the ECB could cut interest rates if new information warranted such a move, although he questioned the effectiveness a further cut would have on boosting the economy. "Rightly or wrongly markets have interpreted these comments as the precursor to possible action on rates in the coming weeks," said Hewson. Gold prices climbed to $1,392 per ounce on the London Bullion Market. That compared with $1,380 late in New York on Tuesday, when it had struck a two-year low at $1,321.95 on the back of disappointing Chinese GDP data. In company news, British retail giant Tesco saw its share price slide 3.9 percent to 369.75 pence after posting falling annual profits. Tesco said it took a £1.2 billion ($1.8 billion, 1.4 billion euro) hit from failed US division Fresh & Easy, sparking the first drop in annual profits in almost two decades, and confirmed its exit from the United States. Net profits slumped 95 percent to £124 million in its 2012/13 financial year, compared with £2.806 billion last time around, Tesco revealed. Earnings dived as Britain's biggest retailer also booked a £804 million write-down on the value of its property portfolio in Britain. Shares in the European aerospace and defence giant EADS leapt by 4.85 percent to 39.00 euros in Paris however as the group continued the revamp its shareholder structure with German automaker Daimler selling its stake. US stocks moved lower after earnings reports from Bank of America, Intel and Yahoo disappointed investors. The Dow Jones Industrial Average sank 0.99 percent to 14,610.10 points in midday trading. The broad-based S&P 500 dropped 1.54 percent to 1,550.39 points, while the tech-rich Nasdaq Composite Index fell 1.89 percent to 3,203.05 points. Bank of America and Intel reported earnings that missed Wall Street expectations, while Yahoo reported weak online ad revenue. Elsewhere, Asian equities traded mixed Wednesday as a Tuesday rebound on Wall Street settled nerves after a two-day sell-off sparked by the weak Chinese growth data. Tokyo climbed 1.22 percent, Sydney rose 1.09 percent, while Seoul and Shanghai were flat and Hong Kong fell 0.47 percent. Traders also moved in to pick up cheap stocks after the previous day's sell-off, which was inflamed by a double bomb attack on Boston that killed three people and injured more than 180.

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