The German market is in negative territory on Thursday, as a series of negative economic news dampened investor confidence, doing little to mitigate the concerns of a debt contagion.
Moody's Investors Service on Wednesday downgraded two euro area members, Spain and Cyprus, and placed their bond ratings on review for further possible downgrade. Spanish government bond rating was lowered by three notches to Baa3 from A3, just one notch above the junk level.
Moody's said the government's decision to seek 100 billion euros financial support from EU will further increase the country's debt burden, which has risen dramatically since the onset of the financial crisis.
Spain's benchmark 10-year bond yield hit a euro-era record high 7 percent today. Meanwhile, Italy raised the targeted maximum amount at a debt auction, but the yield on its three-year bond surged as investors remained worried that the country may be the next to seek a bailout.
Chancellor Angela Merkel has said that Germany is ready to use its powers to mend the global economy, but its strength is not limitless. Speaking to the German Parliament, she urged other euro nations not to overestimate Germany's ability to fight the crisis. Its "strength is not unlimited," Merkel was quoted as saying.
The Euro Stoxx 50 index of eurozone bluechip stocks is losing 0.76 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is falling 0.74 percent.
The DAX index opened lower and is currently falling 1 percent.
Daimler is leading the losers by declining 3.3 percent. BMW and Volkswagen are falling 2.8 percent and 1.6 percent, respectively.
Infineon Technologies and Adidas are declining 2.9 percent each.
Kabel Deutschland is falling 1.2 percent. The cable operator reported a profit for the fourth quarter, and added that it would keep dividend for 2012/2013 unchanged from the prior year.
Fraport is moderately down. The operator of Frankfurt Airport reported a slight increase in passenger traffic for May.
Dialog Semiconductor is declining 8 percent after Berenberg cut the stock to "Hold" from "Buy."
Cheuvreux reduced its rating on RWE to "Outperform" from "Selected List." The stock is down 0.7 percent.
Deutsche Bank is declining 2.7 percent while Commerzbank is losing moderately.
Cheuvreux raised HeidelbergCement to "Outperform" from "Underperform." The shares are dropping around 2 percent.
TUI is climbing 1.5 percent. The travel firm was upgraded to "Buy" from "Hold" at Deutsche Bank.
Elsewhere in Europe, the French CAC 40 is falling 0.89 percent and the UK's FTSE 100 is losing 0.89 percent. Switzerland's SMI is dropping 0.85 percent.
In economic news, the Swiss National Bank decided to retain the exchange rate cap and the near-zero interest rate, but said it "will not tolerate" further gains in the currency and is prepared to take necessary measures at any time.
The central bank said it would continue to enforce the minimum exchange rate of 1.20 Swiss francs per euro "with the utmost determination." The bank said it is prepared to buy foreign currency in unlimited quantities for this purpose.
Data from Eurostat showed that Eurozone inflation slowed to a 15-month low in May as initially estimated. Annual inflation fell to 2.4 percent from 2.6 percent in April. On a monthly basis, consumer prices were down 0.1 percent in May.
Across Asia/Pacific, major markets ended in the red. Australia's All Ordinaries slid 0.5 percent, China's Shanghai Composite Index lost 1 percent and Hong Kong's Hang Seng declined 1.2 percent. Japan's Nikkei 225 slipped 0.2 percent.
In the U.S., futures point to a slightly lower open on Wall Street. In the previous session, the major averages edged up off their worst levels going into the close but remained stuck firmly in negative territory. The Dow fell 0.6 percent, the Nasdaq slid 0.9 percent and the S&P 500 dropped 0.7 percent.
In the commodity space, crude for July delivery is adding $0.03 to $82.65 per barrel and August gold is losing $0.3 to $1619.1 a troy ounce.
by RTT Staff Writer
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