AFP
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Europe’s main stock markets slid on profit-taking and the euro retreated from a two-year high against the dollar yesterday, as traders looked nervously on ECB plans to assess banks.
London’s benchmark FTSE 100 index ended the day 0.32% lower at 6,674.48 points.
Frankfurt’s DAX 30 fell 0.31% to 8,919.86 points and the CAC 40 in Paris sank 0.81% to 4,260.66 points.
Wall Street was also on a weak note.
Meanwhile, Germany paid its highest interest rate for two years at a 30-year bond auction yesterday, with demand lower as the country’s safe-haven status wanes amid a gradual eurozone recovery.
The average yield for the 30-year Bund was 2.64%, against 2.47 in the last such quarterly issue on July 31, according to figures released by the Bundesbank.
Plummeting banking shares weighed heavily in Madrid where the IBEX 35 index slumped 1.84% and in Milan where the MIB retreated 2.35%.
The European Central Bank (ECB) said it would next month start to “stress-test” and examine the balance sheets of 124 eurozone banks in advance of assuming an unprecedented supervisory role.
The exhaustive year-long review will seek to sniff out risky loans and assets, insufficient capital and other dangers that would make banks more vulnerable to financial shocks.
ECB president Mario Draghi called the project “an important step forward for Europe” with transparency the main objective.
Shares in Europe’s biggest banks were hit hard. In Germany Deutsche Bank sank 2.18% and Commerzbank lost 4.08%. In London, RBS fell 2.93%, while Madrid’s Santander lost 2.39% and France’s BNP Paribas sank 2.18%.
The announcement came as Spain said it escaped its two-year recession in the third quarter of this year with timid growth as job destruction eased, the country’s central bank said yesterday.
After nine quarters of contraction in a row, the Spanish economy—the fourth-biggest in the eurozone—grew by 0.1%, the Bank of Spain announced.
Ben May, analyst at Capital Economics consultants, said he doubted however “that the (Spanish) economy will generate a strong enough recovery to bring the unemployment rate and public debt down significantly over the next couple of years”.
In foreign exchange trading yesterday, the euro reached $1.3793 - the highest point since November 2011, but it later stood at $1.3778, which compared with $1.3780 late in New York on Tuesday.
The European single currency meanwhile came sharply off four-year highs against the yen.
The dollar slid to ¥97.28 from ¥98.12 on Tuesday. Sterling fell against the euro and dollar.
On the London Bullion Market, gold was stable at $1,331.25.
The dollar had sunk on Tuesday after weaker-than-expected US jobs data raised expectations the Federal Reserve would keep its stimulus programme in place, traders said.
Traders took the data as a cue to buy as the Fed has said it will reel in its $85bn a month bond-buying scheme only when the economy is strong enough.
Wall Street was also in the red at midday, with the Dow Jones Industrial Average off 0.41% and the Nasdaq down by 0.73%.
In other share price movement yesterday, French telecoms group Orange fell 5.35% to €10.08 after the company formerly known as France Telecom reported a 5.5% fall in sales in the third quarter.
At brokers Global Equities, Xavier de Villepion commented: “The results are not so bad as all that,” adding that the shares had fallen mainly because of profit-taking after a recent strong rise.
Shares in automaker PSA Peugeot Citroen rose 3.32% despite a sales slip in the third quarter.
Asia markets fall; Sensex down
Asian markets fell yesterday, while the dollar dropped after weaker-than-expected US jobs data raised expectations the Federal Reserve will keep its stimulus programme in place.
The September report out of Washington showed the economy struggling to add jobs even before a two-week government shutdown this month that analysts say probably smothered hiring even more.
Tokyo tumbled 1.95%, or 287.20 points, to 14,426.05 as exporters were hit by a stronger yen, while Sydney fell 0.32%, or 17.0 points, to 5,356.1 and Seoul fell 0.99%, or 20.37 points, to 2,035.75.
Shanghai gave up 1.25%, or 27.54 points, to 2,183.11, while Hong Kong fell 1.36%, or 316.04 points, to 22,999.95.
In other markets; Bangkok was closed for a public holiday; Taipei fell 0.29%, or 24.65 points, to 8,393.62; Wellington rose 0.92%, or 44.61 points, to 4,876.40; Manila closed 0.48% higher, or 31.51 points, to 6,635.11; Jakarta ended up 0.75%, or 33.76 points, at 4,546.50; Kuala Lumpur gained 0.58%, or 10.53 points, to 1,814.11; while Singapore eased 0.17%, or 5.41 points, to 3,204.80.
However, emerging markets were higher on hopes for a continuation of the Fed’s easy money programme, which has been credited with funding an investment splurge in developing economies.
Indian shares ended lower yesterday as investors took profits in information-technology stocks and Tata Motors that have risen sharply in recent sessions.
The Bombay Stock Exchange’s S&P BSE Sensex ended 0.5% down at 20767.88 points, while the National Stock Exchange’s Nifty index fell 0.4% to 6178.35 points.
The 30-stock benchmark Sensex has now gained about 7.2% this month, while the 50-stock Nifty has risen 7.7%, helped by a sharp bounce back in metal, industrials and some auto stocks. Information technology stocks have also rallied on improving business outlook.
The rupee currency gained against the US dollar as concerns over the strength of the US economy weighed on the greenback. The rupee closed at 61.62 in local trading, compared with 61.64 on Tuesday.