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German Shares Ease On Debt Fears

4/18/2012 6:42 AM ET

German shares edged lower on Wednesday, as European debt worries remain, with Spain in the spotlight ahead of two- and 10-year bond auctions on Thursday. Growth concerns also returned to the fore after data showed that construction output in the euro area decreased for the third month in a row in February.

According to data released by statistical office Eurostat, construction output decreased a seasonally adjusted 7.1 percent on a monthly basis in February, contrasting with 0.5 percent growth in January. Construction output in Germany plunged 17.1 percent month-over-month, while output in France edged down 0.4 percent. The output of the Italian construction sector fell by 9.9 percent.

The benchmark German DAX is currently at 6,779, down 22 points or 0.34 percent from its previous close, while France's CAC 40 is declining 1.1 percent, the U.K.'s FTSE 100 is down marginally and Switzerland's SMI is moving down 0.3 percent.

The Euro Stoxx 50 index of eurozone bluechip stocks is losing 1.1 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is edging down a modest 0.1 percent.

Allianz is down marginally after Hartford Financial Services Group Inc. said it completed buying back debt and stock warrants from the German insurer for $2.425 billion. CommerzBank is rising marginally and shares of Deutsche Bank are rising 0.7 percent.

Volkswagen is edging up 0.2 percent on a Bloomberg report that it will announce plans for a new factory and other projects in China on April 23. Shares of Daimler are moving down half a percent.

Infineon is rising 0.2 percent after Intel, the world's largest semiconductor maker, forecast better than expected revenue for the second quarter. SGL Carbon is plunging 5.4 percent after the carbon fiber maker said it would issue convertible notes to fund the company's expansion in Portugal and China.

Elsewhere, Asian shares rose across the board as a stronger-than-expected reading on German ZEW investor sentiment index and a successful Spanish sovereign debt auction soothed worries over Europe's debt crisis. Strong U.S. corporate earnings and an improved IMF forecast for global growth also improved appetite for riskier assets.

Commodities are subdued and trading in the U.S. index futures point to a flat opening on Wall Street.

After moving briefly sideways in Asian trading, the U.S. dollar resumed its rally against the euro as French President Nicolas Sarkozy said that the euro's exchange rate against the dollar must be discussed with the European Central Bank.

Sarkozy, who is seeking a second presidential term, told the local television channel BFM TV that euro is too expensive and a stronger euro hurts exporters as they would be less competitive. "These are debates that we must have with the ECB Governor," he reportedly said.

In economic releases, the Eurozone current account unexpectedly logged a seasonally adjusted deficit of EUR 1.3 billion in February, the European Central Bank said Wednesday. Economists were expecting the surplus to fall to EUR 2 billion from EUR 3.7 billion surplus seen in January.

Meanwhile, high oil prices may keep Eurozone's consumer price inflation sticky in the coming months, dampening the regions recovery prospects, IHS Global Insight chief UK & European Economist Howard Archer said in a note today.

by RTT Staff Writer

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