The European markets closed mixed on Monday, on a relatively light trading day. The U.K. market was closed due to the Queen's Diamond Jubilee and will be closed again on Tuesday. Banks were largely positive after Spanish Prime Minister Mariano Rajoy, over the weekend, reportedly urged for the establishment of a fiscal authority to oversee the fiscal policy in eurozone. However, weaker than expected economic results from both China and the U.S. had a negative effect on the markets. Automakers were also a source of weakness, after the release of disappointing May sales results.
China's non-manufacturing activity growth slowed for the second consecutive month in May, signaling economic slowdown in the second largest economy. The Purchasing Managers' Index came in at 55.2 in May, the lowest since March 2011, and down from 56.1 in April, official data released by the China Federation of Logistics and Purchasing showed Sunday.
Eurozone's unemployment, which hit a record high in April, is likely to increase further and reach significantly high levels by year-end, Capital Economics chief European and UK Economist Howard Archer said Monday.
IHS Global Insight noted that jobless rate in the single-currency bloc may rise to 11.5 percent by the end of this year with the region seemingly headed for renewed clear GDP contraction in the second quarter, and with business confidence weakening to a two-year low in May. Also, companies generally are under serious pressure to keep their labor forces tight to contain costs amid limited demand, strong competition, squeezed margins and uncertain growth outlooks, the firm noted.
Fitch Ratings on Monday said the "yes" vote in Ireland's referendum on the Eurozone's fiscal compact is positive for the sovereign, and cleared a potential source of uncertainty about nation's future funding.
Portugal's ambitious 2012 fiscal deficit target remains within reach, the European Commission, European Central Bank and International Monetary Fund said in a joint statement on Monday. Portugal has cleared the fourth review of its EUR 78 billion bailout programme. The lender is set to disburse the next EUR 4.1 billion tranche of the bailout fund in July.
"The programme remains on track amidst continued challenges," lenders said. The authorities are implementing the reform policies broadly as planned and external adjustment is proceeding faster than expected.
The authorities expect to achieve the deficit target of 4.5 percent of GDP, despite an economic slowdown. The economy is projected to shrink 3 percent this year. Continued tensions in the euro area represent a risk clouding the external outlook, it said.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.52 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.35 percent.
The DAX of Germany dropped by 1.19 percent and the SMI of Switzerland finished lower by 1.11 percent. The CAC 40 of France climbed by 0.14 percent, but the FTSE 100 of the U.K. was closed due to the Queen's Diamond Jubilee.
In Frankfurt, Bayer fell by 0.79 percent. The company announced that a late-stage study evaluating its potential blockbuster cancer compound regorafenib, in patients with one of the most common tumors of the gastrointestinal tract, met its primary endpoint.
Deutsche Bank upgraded K+S to "Hold" from "Sell." The stock decreased by 1.34 percent.
Deutsche Boerse gained 0.92 percent. Merrill Lynch cut its price target on the stock.
Deutsche Bank climbed by 1.05 percent, but Commerzbank finished down by 0.77 percent.
Volkswagen dropped by 3.23 percent, Daimler lost 1.89 percent and BMW fell by 3.18 percent.
In Paris, Air Liquide finished down by 0.76 percent, after Nomura cut its price target on the stock.
Societe Generale gained 3.51 percent, Credit Agricole rose by 1.77 percent and BNP Paribas added 3.38 percent.
Renault decreased by 2.91 percent, but Peugeot gained 0.32 percent.
Zurich Insurance Group said Mario Greco, CEO of General Insurance, has decided to return to Italy to be the chief executive of Assicurazioni Generali, as the Italian insurer revoked the powers of its CEO Giovanni Perissinotto. Zurich Insurance declined by 1.47 percent.
Producer prices in Eurozone's industrial sector remained unchanged in April, the latest figures from Eurostat showed Monday. The producer price index remained flat month-on-month in April against forecast for a 0.2 percent increase. In March, there was a 0.5 percent rise in overall industrial producer prices.
Pipeline inflation eased more than expected to 2.6 percent in April, the lowest since March 2010, from 3.5 percent in March, the latest figures from Eurostat showed Monday. The expected inflation rate was 2.7 percent.
Eurozone investor sentiment declined in June to the lowest level in almost three years, data released by think tank Sentix showed Monday. The corresponding index fell to -28.9 in June, the lowest value since May 2009, from -24.5 in May. Economists expected a fall in the index to -29.5.
New orders for U.S. manufactured goods saw an unexpected decrease in the month of April, according to figures released Monday by the Commerce Department. The report show new orders for manufactured goods in April falling by $2.9 billion or 0.6 percent from revised March figures.
Furthermore, revised data show that the March decline in new factory orders, initially reported as a 1.5 percent drop from February, was even steeper at a drop of 2.1 percent. Most economists had expected to see factory goods orders rebound and show a slight, 0.1 percent increase in April.
by RTT Staff Writer
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