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European Markets Extended Recent Losses As Growth Concerns Persist

The European markets finished to the downside again Thursday, extending losses from the previous 2 sessions. Bank stocks continued to be a source of weakness. Shares of European automakers were also under pressure after S&P stated that the European auto sector is will decline at least 5% in 2012. Concerns over global growth persisted after weaker than expected economic results were reported in both Europe and the U.S. Statements made by the think tank OECD also weighed on the European markets.

The Organization for Economic Co-operation and Development estimates robust growth in the United States, but sees Europe remaining more fragile where weak confidence, rising unemployment and tight credit point to further fall in activity.

The OECD sees technical recession in the U.K., with GDP falling 0.4 percent in the first quarter, after contracting in the final quarter of 2011. Nonetheless, a moderate recovery is expected in the second quarter. In the euro area, Germany, France and Italy together will shrink by 0.4 percent on average during the first quarter, before a moderate 0.9 percent growth recovery in the second quarter, the think tank said.

Moody's Investors Service said it has downgraded the credit ratings of five Portuguese banks, mainly due to an expected further deterioration in asset quality, additional asset risks and lack of access to wholesale funding sources. Moody's said Wednesday that it is cutting senior debt and deposit ratings for four banks by one notch, aligning their ratings at the same level or one notch below the Ba3 ratings of the Portuguese government debt.

The Euro Stoxx 50 index of eurozone bluechip stocks declined by 1.69 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 1.12 percent.

The CAC 40 of France fell by 1.43 percent and the DAX of Germany finished down by 1.77 percent. The FTSE 100 of the U.K. dropped by 1.19 percent and the SMI of Switzerland closed lower by 1.22 percent.

In Frankfurt, Man finished down by 1.20 percent. Berenberg downgraded its rating on the stock to "Sell" from "Hold."

Among the automakers, Daimler fell by 3.20 percent, BMW lost 2.14 percent, Volkswagen declined by 2.48 percent and Porsche finished down by 3.11 percent.

ThyssenKrupp dropped by 2.36 percent, after Exane BNP lowered its rating on the stock to "Underperform" from "Neutral."

Vossloh closed lower by 0.63 percent. The rail infrastructure provider expects a rebound in sales and earnings for the next two years with an all-time high order backlog.

SMA Solar sank by 8.18 percent. The company halved its annual dividend and its full-year 2011 profit plunged nearly 55 percent, reflecting slowing demand for photovoltaics.

Hochtief fell by 2.20 percent. The construction firm reduced its 2012 profit forecast after its Australian subsidiary Leighton lowered its full year earnings outlook due to slower performance at two of its projects.

Hawesko gained 0.79 percent, after it was upgraded to "Buy" from "Hold" at Deutsche Bank.

In Paris, Total fell by 0.37 percent as it continues to grapple with a gas leak at its Elgin oil fields in the North Sea.

HSBC downgraded Vivendi to "Neutral" from "Overweight." The declined by 1.37 percent.

Among the automakers, Renault declined by 2.81 percent and Peugeot fell by 5.70 percent.

ArcelorMittal was downgraded by Societe General to "Hold" from "Buy," while Exane BNP upgraded the stock to "Neutral" from "Underperform." The stock finished down by 0.46 percent.

In London, FirstGroup plunged by 14.84 percent. The company expects pressure on the performance of its UK Bus business, due to lower economic activity, particularly in Scotland and the North of England.

Cape declined by 4.16 percent. The company announced that Martin May resigned as chief executive and as a director of the company effective immediately, to pursue a new challenge. Brendan Connolly has been appointed as acting chief executive.

Imperial Tobacco increased by 1.63 percent. The company affirmed that its overall financial position and operational performance for the year to September 30 are in line with the board's expectations.

International Power jumped by 5.61 percent. GDF Suez confirmed that it has made an approach to the independent directors of International Power regarding a possible cash offer for the remaining International Power shares not already held by the company. GDF shares fell by 1.54 percent in Paris.

In Zurich, shares of Roche declined by 1.63 percent. The pharma giant raised its offer price for US-based genetic diagnostics company Illumina.

Germany's unemployment rate declined to 6.7 percent in March, from 6.8 percent in February, data from the Federal Labor Agency showed Thursday. Economists had expected the jobless rate to remain steady at 6.8 percent for a third consecutive month.

Eurozone economic confidence dipped marginally in March as manufacturers and construction firms turned gloomy about future prospects. After improving in January and February, the economic sentiment index fell to 94.4 from an upwardly revised 94.5 a month ago, survey data from the European Commission revealed Thursday. The reading was below the consensus forecast of 94.5.

With a downward revision to exports offset by an upward revision to non-residential fixed investment, the Commerce Department released a report on Thursday showing that the pace of U.S. economic growth in the fourth quarter was unrevised. The report showed that GDP increased at an annual rate of 3.0 percent in the fourth quarter, unchanged from the previous estimate and in line with economists' expectations.

While the Labor Department released a report on Thursday showing a modest drop in initial jobless claims in the week ended March 24th, jobless claims came in above economist estimates due to an upward revision to the previous week's data. The report showed that jobless claims edged down to 359,000 from the previous week's revised figure of 364,000. Economists had expected jobless claims to inch up to 350,000 from the 348,000 originally reported for the previous week.

by RTT Staff Writer

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