The European markets are lower on Friday, as some disappointing news from across the Atlantic, where Federal Reserve Chairman Ben Bernanke refrained from announcing any stimulus measures, dampened investor sentiment. A faster than expected decline in German exports also hurt confidence, in addition to Fitch's action on Spain.
In his testimony before the Joint Economic Committee in Washington, Bernanke said U.S. economic growth appears poised to continue at a moderate pace and suggested that last week's disappointing jobs report may have reflected temporary factors. He didn't signal any imminent action, but said the Fed would intervene if financial conditions worsen.
Meanwhile, ratings agency Fitch downgraded Spain's sovereign ratings by three notches to 'BBB' from 'A.' This reflects higher than expected fiscal cost of restructuring and recapitalizing the Spanish banking sector, which it now estimates to be around 60 billion euros or as high as 100 billion euros in a more severe stress scenario.
Bank of Spain Governor Miguel Fernandez Ordonez said the sovereign debt crisis and the economy's financing conditions have placed Spain in a position of extreme vulnerability. He said the prospects of a recovery from recession "are not immediate." Moreover, the prolonged cyclical weakness is preventing swifter headway in redressing public finances and in reducing private-sector debt, he said during the presentation of the annual report.
Eurozone finance ministers are reportedly holding a meeting on Saturday to discuss aid for Spain.The EU is said to be having necessary tools in case Spain needs aid.
The Euro Stoxx 50 index of eurozone bluechip stocks is declining 0.70 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is dropping 0.78 percent.
The German DAX is retreating 0.88 percent and the French CAC 40 is falling 1.06 percent. The UK's FTSE 100 is dropping 0.94 percent and Switzerland's SMI is losing 0.52 percent.
On the DAX, Commerzbank is falling 3.4 percent and Deutsche Bank is retreating 1.9 percent.
Volkswagen, BMW and Daimler are losing between 2.8 percent and 1.2 percent. UBS added Volkswagen preferred shares to 'Least Preferred List.'
Celesio is climbing 3.6 percent after Cheuvreux raised the stock to "Outperform" from "Underperform."
Peugeot is dropping 2.4 percent and Renault is losing 1.7 percent in Paris. UBS added Renault to "Most Preferred List."
Credit Agricole, Societe Generale and BNP Paribas are declining between 1.7 percent and 1.3 percent.
Havas is plunging 7.7 percent as the advertising firm reportedly received a broker downgrade.
In London, miners Anglo American and BHP Billiton are dropping 2.6 percent each. Rio Tinto is declining 3.8 percent.
Barclays and Royal Bank of Scotland are losing 2 percent each, while Lloyds banking is down 1.3 percent.
Marks & Spencer is falling 0.9 percent. The clothing retailer said it would foray into banking business this summer with the launch of the first M&S Bank scheduled for next month.
Lamprell is plunging 23 percent after revising its previous forecast.
Novo Nordisk is declining 3 percent in Copenhagen after stating that the FDA extended the review period for insulin degludec and insulin degludec/insulin aspart by three months.
Hennes and Mauritz is losing 2 percent in Stockholm. Societe Generale cut the stock to "Sell" from "Hold."
In economic news, German exports declined faster than expected in April as the deepening crisis in the euro area impacted demand from European countries, data from the Federal Statistical Office revealed. Signaling the weakening of domestic consumption, imports plunged at the fastest pace in two years.
U.K. output price inflation eased in May to the lowest since November 2009, data from the Office for National Statistics showed. Month-on-month, input prices were down 2.5 percent, which was the largest monthly fall since December 2008.
Across Asia/Pacific, markets were a sea of red. Australia's All Ordinaries lost 1.1 percent, China's Shanghai Composite Index dropped 0.5 percent and Hong Kong's Hang Seng fell 0.9 percent. Japan's Nikkei 225 retreated 2.1 percent.
In the U.S., futures point to a lower open on Wall Street. In the previous session, the major averages ended the day on opposite sides of the unchanged line. The Dow rose 0.4 percent, while the Nasdaq fell 0.5 percent and the S&P 500 edged down less than a tenth of a percent.
In the commodity space, crude for July delivery is losing $2.53 to $82.29 per barrel and August gold is falling $8.8 to $1579.2 a troy ounce.
by RTT Staff Writer
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