Europe shares end down on weak data, Fed action fears

A customer selects goods from the fruit and vegetable section inside a Tesco supermarket in London. Tesco saw its share price slide 5.17% to land at 345.6 pence after the supermarket posted underwhelming first-quarter sales.

AFP/London

Europe’s main stock markets closed sharply lower yesterday, with sentiment hit by weak eurozone data on the eve of an interest rate decision from the European Central Bank as well as fears the Fed will begin cutting monetary stimulus.

Official data showed the 17-nation eurozone stuck in recession for a sixth consecutive quarter in the first three months of 2013.

London’s FTSE 100 index of leading shares ended the day 2.12% lower at 6,419.31 points.

In Frankfurt the Dax 30 index lost 1.20% to finish at 8,196.18 points, while in Paris the Cac 40 shed 1.87% to 3,852.44 points.

Sentiment was equally downbeat in midday trading on Wall Street, where the Dow Jones Industrial Average shed 0.76%, the broad-based S&P 500 fell 0.90% and the tech-rich Nasdaq Composite lost 0.81%.

US stocks had also slid on Tuesday as an expanded US trade deficit offered a fresh sign of weakness in growth, sparking a wave of selling.

Investors were eagerly awaiting Friday’s vital US non-farm payrolls data, which could provide clues on whether the Federal Reserve will maintain its quantitative easing (QE) economic stimulus measures.

The European single currency rose to $1.3089 from $1.3079 late in New York on Tuesday, and before Thursday’s ECB interest rate call today. The dollar eased to ¥99.16 from ¥99.98.

The Eurostat statistics agency said the eurozone economy shrank 0.2% compared with the last quarter of 2012, and contracted 1.1% compared with a year earlier.

Separate data showed that eurozone business activity continued to deteriorate in May but at a slower pace.

The closely-watched Markit Eurozone Composite Purchasing Managers Index (PMI) for May was unchanged from an initial reading at 47.7 points, well up on April’s 46.9 points. However, this was still below the boom-bust threshold of 50 points.

In company news, the European supermarket sector faced heavy selling pressure.

Britain’s biggest retailer Tesco saw its share price slide 5.17% to land at 345.6 pence after the supermarket posted underwhelming first-quarter sales.

Group sales rose 1.8% in the 13 weeks to May 25, compared with the same period a year earlier, Tesco said in a trading update.

However, British sales sank 1.0% on a like-for-like basis, stripping out the impact of new floor space, and excluding petrol and VAT.

In Paris, French supermarket peer Carrefour was rocked by a downgrade from HSBC bank, sending its share price tumbling 4.09% to close at €21.47.

In trading on the London Bullion Market, the price of gold rose to $1,404 an ounce yesterday, from $1,399.50 on Tuesday.