The euro remained under pressure in early deals Friday as worse-than-expected Chinese July trade data reignited worries about global growth outlook.
Tracking lower commodity prices and a weak trend across Asia, the European stocks fell following downbeat China data.
U.K.'s FTSE 100 Index is currently down 0.24 percent, France's CAC 40 is trading lower at 0.86 percent and Germany's DAX is currently down 0.55 percent.
With exports growing just 1 percent year-over-year and imports slowing for the second consecutive month, China's trade surplus dropped to $25.1 billion in July from $31.7 billion in June.
The data paints a bleak economic picture, especially as the world's second largest economy has seen its GDP growth ease to the lowest in more than three years in the second quarter.
In economic news, Germany's EU harmonized inflation came in below the preliminary estimates In July, final data released by the Federal Statistical Office showed today.
The harmonized index of consumer prices (HICP), measured under the EU methodology, increased 1.9 percent annually in July, slightly slower than the 2 percent gain estimated earlier. In June, the inflation rate was 2 percent.
Month-on-month, the HICP moved up 0.4 percent in July, unrevised from the flash estimates. In June, prices dropped 0.2 percent sequentially.
At the same time, the consumer price index increased an unrevised 1.7 percent year-on-on year in July, which also matched the figure for June. Month-on-month, prices edged up 0.4 percent as estimated earlier.
The euro pull back from its previous week's resistance zone took firmness against the dollar in early deals, falling to a 1-week low of 1.2263 in early London session on Friday. The next key support level to watch for the pair is seen around 1.2220.
The common currency erased some of its late Asian session gains against the pound in early deals on Friday. The euro was trading at 0.7864 against the pound, down from 0.7880 hit earlier in the session.
Traders paid little attention on the U.K. output price inflation data, which eased to 1.7 percent in July from a revised 2 percent in June. Economists had forecast the rate of inflation to ease to 2 percent from June's originally estimated 2.3 percent. On a monthly basis, the output price index remained flat in line with expectations.
The single currency also slipped to a weekly low of 96.17 against the yen in early London deals. The pair is now hovering at its near-term support level of 96.15/20 and the next downside target could be around the 95.60 level.
Japan's industrial output increased modestly a seasonally adjusted 0.4 percent month-on-month in June, defying preliminary estimates for a 0.1 percent decline. In May, production had decreased 3.4 percent sequentially. Annually, overall industrial output decreased 1.5 percent in June, slightly sower than 1.6 percent fall estimated earlier.
The euro remained in its familiar ranges against the Swiss franc after having tested yesterday's multi-day low of 1.2011. The euro-franc pair is presently see-sawing between a tight range of 1.2011/15.
The European shared currency also underperformed against the resource-linked units, slipping as low as 1.1632 against the Australian dollar, 1.2177 against the Canadian dollar and a 3-day low of 1.5132 against the NZ dollar.
The Reserve Bank of Australia revised up its forecasts for economic growth and core inflation, but warned that sustained gains in the currency could have a more contractionary effect on the economy than was the case in the past.
In the latest quarterly Monetary Policy Statement issued today, the central bank said the economy would likely expand by an average 3.75 percent in 2012, faster than the 3 percent growth predicted in the May statement.
In the year through December 2012, the GDP is now projected to grow 3.5 percent, slightly faster than the 3 percent predicted in the May. For the year ending December 2013, GDP is seen expanding 2.5-3.5 percent, unchanged from the May forecast.
by RTT Staff Writer
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