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European Markets Finished Solidly Lower After Weak Economic Reports

The European markets posted significant losses on Friday, after weaker than expected economic reports from Europe and the U.S. The markets had slipped into the red following the lower than expected Eurozone private sector report and then accelerated lower after the weaker than expected U.S. jobs report. Investors will be closely watching the results of the elections in both France and Greece that are scheduled to take place this weekend.

Today's collapse in the oil market dragged shares of oil and oil service stocks lower. Prices of both Brent and WTI declined sharply due to global economic concerns. Mining stocks and automakers were also weak Friday, but defensive stocks and banks outperformed the market. The Euro Stoxx 50 index of eurozone bluechip stocks declined by 1.65 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, finished down by 1.50 percent.

The DAX of Germany dropped by 1.99 percent and the CAC 40 of France closed lower by 1.90 percent. The FTSE 100 of the U.K. fell by 1.93 percent and the SMI of Switzerland lost 0.67 percent.

In Frankfurt, Linde declined by 1.17 percent. The company posted a higher first-quarter profit, helped by improved demand for gases worldwide and confirmed its short-term and medium-term outlook. Meanwhile, WestLB downgraded the stock to "Neutral" from "Add."

Barclays reduced Merck KGaA to "Underweight" from "Equalweight." The stock lost 3.04 percent.

Wacker Chemie dropped by 6.05 percent, after the company reported a decrease in first quarter sales.

Societe Generale upgraded Beiersdorf to "Buy" from "Hold." The stock finished down by 1.22 percent.

In Paris, BNP Paribas dipped by 0.36 percent. The company reported a higher first-quarter profit, benefited by a capital gain related to the sale of its stake in Klépierre SA.

Alstom sank by 4.26 percent, after the company's earnings fell short of expectations.

LeGrand rose by 2.54 percent. The company posted a 5 percent increase in quarterly revenues, but a 3 percent decline in profit. LeGrand also confirmed its full year expectations.

Lafarge declined by 2.20 percent. The cement giant reported higher EBITDA for the first quarter, even as net loss widened, owing to restructuring costs.

Air France - KLM reported a slightly wider loss for the first quarter as fuel costs surged from last year. The stock finished down by 0.77 percent.

In London, Royal Bank of Scotland dipped by 0.33 percent. The company reported a wider loss for its first quarter, mainly reflecting charges on credit adjustments. The lender said it is continuing on the recovery path. Shares of BP dropped by 3.11 percent and Royal Dutch Shell declined by 1.95 percent. BG Group also fell by 4.25 percent.

Among the miners, Rio Tinto finished lower by 4.42 percent and Fresnillo closed down by 3.52 percent. BHP Billiton dropped by 3.91 percent and Antofagasta fell by 3.25 percent. Kazakhmys also fell by 6.18 percent.

In Zurich, UBS removed Novartis from the 'Key Call List' and raised AstraZeneca to it. AstraZeneca fell by 0.60 percent and Novartis finished up by 0.22 percent.

Swiss Re increased by 1.47 percent, after turning a profit in the first quarter.

Clariant was upgraded to "Neutral" from "Underweight" at HSBC. The stock slipped by 0.02 percent.

Eurozone retail sales recovered unexpectedly in March, but the underlying trend in spending remains soft as austerity measures dampen consumer confidence. Retail sales volume climbed 0.3 percent month-on-month in March, offsetting February's 0.2 percent drop, Eurostat said Friday. Economists had expected sales to remain flat in March.

Eurozone private sector activity declined in April at the fastest rate since October 2011, final data released by Markit showed Friday. The composite output index dropped to 46.7 in April from 49.1 in March. The headline index also came in well below its earlier flash estimate of 47.4.

Germany's services sector grew less-than-expected in April, final data from a Markit Economics/BME survey revealed Friday. The Purchasing Managers' Index (PMI) for the services sector edged up to 52.2 from 52.1 in March. The final reading was below the flash estimate of 52.6.

The French service sector contracted in April largely due to a deceleration in incoming new business, final data from Markit Economics showed Friday. The final business activity index dropped to 45.2, down from the flash estimate of 46.4. It stayed below March's 50.1.

Job creation in the U.S. was weaker than expected in the month of April, according to figures released by the Labor Department on Friday, although the report also showed another drop by the unemployment rate. The overall economy added 115,000 jobs in April compared to revised data that showed March job creation at 154,000, notably higher than the 120,000 initially reported.

The job creation numbers for April were well below the predictions of most economists, who had forecast 165,000 new jobs for the month. Despite the weaker than expected job growth in April, the unemployment rate ticked down to 8.1 percent in April from the 8.2 percent reported for March.

by RTT Staff Writer

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