Europe markets close mostly lower
Sunday, 29 June 2008
LONDON, June 28 (Internet): European stock markets closed mostly lower Friday, extending losses in a global sell-off sparked by growing concerns about the economic outlook as oil prices soared to fresh records above $142.
Dealers said that after a sharp fall of 3.0 per cent Thursday on Wall Street, Asian markets had only one way to go yesterday and their retreat set Europe up for another tough day.
The downturn, however, was somewhat limited given the significant losses posted Thursday - well above 2.0 per cent in most European centres - as investors tried to find some safety.
Dealers said the damage being done to equities now is caused by fears that slowing economies worldwide will undercut corporate earnings while rising inflation driven by soaring fuel prices will result in higher interest rates.
Combined, that could spell 'stagflation', a fatal combination that bedevilled Western countries in the 1970s and early 1980s in the wake of the 1973/4 and 1979 oil shocks.
Dealers said news of a spike in German inflation and slowing growth in Britain and France added to the gloom, with stocks falling back to their lows for the year and beyond.
"Inflation risk has rapidly replaced credit risk as the predominant issue facing global financial markets," said Barclays Capital analyst Larry Kantor.
"The effects of higher inflation are poised to work through the global economy in profound ways for the remainder of the year."
In London, the FTSE 100 index recovered from early losses to finish with a gain of 0.21 per cent to 5,529.90 points.
However, in Paris, the CAC 40 shed 0.65 per cent to 4,397.32 points and in Frankfurt the DAX index lost 0.58 per cent to 6,421.91 points and there were losses on most other markets.
The Euro Stoxx 50 index of leading eurozone companies was down 0.77 per cent.
On Wall Street, stocks were narrowly mixed in early trade after the battering taken Thursday as investors tried to figure out what to do next, especially as the banks appear still vulnerable to losses resulting from the US subprime home loan crisis.
The benchmark Dow Jones Industrial Average index - which has slumped over 13 per cent so far this year - was down 0.34 per cent at around 1630 GMT.
"The stock market is understandably concerned about high oil prices and weak balance sheets at financial institutions. Market sentiment remains very poor," analysts at Briefing.com said.
Figures showing solid US consumer spending in May provided some support but the gain was limited as the 0.8% rise came in part as Americans spent the proceeds of tax rebate checks.
Some economists suggested that the world's biggest economy will face enduring problems once the one-off rebates and spending boost from a 168bn-dollar economic stimulus package expire later this year.
Dealers said that after a sharp fall of 3.0 per cent Thursday on Wall Street, Asian markets had only one way to go yesterday and their retreat set Europe up for another tough day.
The downturn, however, was somewhat limited given the significant losses posted Thursday - well above 2.0 per cent in most European centres - as investors tried to find some safety.
Dealers said the damage being done to equities now is caused by fears that slowing economies worldwide will undercut corporate earnings while rising inflation driven by soaring fuel prices will result in higher interest rates.
Combined, that could spell 'stagflation', a fatal combination that bedevilled Western countries in the 1970s and early 1980s in the wake of the 1973/4 and 1979 oil shocks.
Dealers said news of a spike in German inflation and slowing growth in Britain and France added to the gloom, with stocks falling back to their lows for the year and beyond.
"Inflation risk has rapidly replaced credit risk as the predominant issue facing global financial markets," said Barclays Capital analyst Larry Kantor.
"The effects of higher inflation are poised to work through the global economy in profound ways for the remainder of the year."
In London, the FTSE 100 index recovered from early losses to finish with a gain of 0.21 per cent to 5,529.90 points.
However, in Paris, the CAC 40 shed 0.65 per cent to 4,397.32 points and in Frankfurt the DAX index lost 0.58 per cent to 6,421.91 points and there were losses on most other markets.
The Euro Stoxx 50 index of leading eurozone companies was down 0.77 per cent.
On Wall Street, stocks were narrowly mixed in early trade after the battering taken Thursday as investors tried to figure out what to do next, especially as the banks appear still vulnerable to losses resulting from the US subprime home loan crisis.
The benchmark Dow Jones Industrial Average index - which has slumped over 13 per cent so far this year - was down 0.34 per cent at around 1630 GMT.
"The stock market is understandably concerned about high oil prices and weak balance sheets at financial institutions. Market sentiment remains very poor," analysts at Briefing.com said.
Figures showing solid US consumer spending in May provided some support but the gain was limited as the 0.8% rise came in part as Americans spent the proceeds of tax rebate checks.
Some economists suggested that the world's biggest economy will face enduring problems once the one-off rebates and spending boost from a 168bn-dollar economic stimulus package expire later this year.