European shares are seen opening lower on Monday, extending Friday's sell-off, as worries over global economic growth continue to haunt investors. After last week's weak Chinese GDP data, South Korea's central bank today lowered its forecast for economic growth this year, citing weaker-than-expected world economic growth and higher oil import prices.
The Bank of Korea said it expects the nation's gross domestic product to rise 3.5 percent this year, weaker than the 3.7 percent growth forecast in December. Export growth is also forecast to slow somewhat, owing to the cooling of world trade growth amid recession in the euro area, the bank said.
Concerns about Spain could weigh on sentiment as well after a surge in the nation's borrowing costs prompted Spain's deputy economy minister, Jaime Garcia-Legaz, to call on the European Central Bank to step up purchases of bonds.
Asian markets fell across the board, with key benchmark indexes in Australia, Hong Kong, South Korea and Japan falling between half a percent and 1.7 percent, as growth concerns coupled with renewed concerns about the euro zone's financial health undermined investor confidence in riskier assets.
Commodities retreated, with Brent crude futures falling over a percent below $120 a barrel and copper losing 1.5 percent, as worries about Chinese growth and lingering fears about the debt-plagued euro zone fueled risk aversion. The euro hit a one-month low against the dollar before Spain auctions bills and longer-dated securities on Tuesday and Thursday, respectively.
Meanwhile, the earnings season picks up pace this week, with major U.S. corporations such as Citigroup, Goldman Sachs Group, Bank of America, Intel and Microsoft slated to announce their first-quarter earnings.
Closer home, house prices in the U.K. rose to a new-record high in April, buoyed by London's strong performance amid lower supply, property website Rightmove said. Average asking prices for a property in the U.K. rose 2.9 percent month-over-month to a new record-high of 243,737 pounds in April. This surpassed the previous record set nearly four years ago in May 2008.
Eurozone foreign trade figures and data on Italian general government debt are the other statistical reports due in the European session.
In corporate news, Swiss banking giant Credit Suisse Group may have to cut about 5000 jobs in its investment banking business at its forthcoming first-quarter results as the investment bank is "simply completely oversized", Der Sonntag reported, citing an unidentified high-ranking executive.
Fraport AG, the owner and operator of Germany's Frankfurt Airport, said 12.18 million passengers passed through Frankfurt Airport in the first quarter, up 3.5 percent from last year.
European shares finished solidly to the downside on Friday, after China, the world's second-largest economy, reported first-quarter growth of 8.1 percent, the weakest in almost three years, and data showed Spanish financial institutions borrowed a record 316.34 billion euros from the European Central Bank last month, rekindling worries about the region's debt crisis.
The Euro Stoxx 50 index of eurozone bluechip stocks tumbled 2.6 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, finished down 1.4 percent, while around Europe, Switzerland's SMI, the U.K.'s FTSE 100, the German DAX and France's CAC 40 fell between 0.9 percent and 2.5 percent.
On Wall Street, stocks moved sharply lower on Friday, with worries about slackening demand from China, negative reaction to quarterly results from JP Morgan and Wells Fargo and data showing an unexpected deterioration in U.S. consumer sentiment in April contributing to the weakness in the markets. The Dow slid 1.1 percent, the tech-heavy Nasdaq fell 1.5 percent and the S&P 500 shed 1.3 percent.
by RTT Staff Writer
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