The European markets finished in negative territory Thursday, largely due to weak economic results from around the globe. The lackluster Chinese manufacturing data got the markets off to a weak start. European data also failed to impress investors, followed by the release of the U.S. weekly jobless claims in the afternoon, which came in above expectations. Energy stocks were under pressure due to falling oil prices, while miners and banks were also weak.
An indicator of China's manufacturing performance rose marginally in September from August's nine-month low, but continued to suggest deterioration in activity with production falling at the fastest pace in ten months. Flash results of a survey by Markit Economics and HSBC revealed Thursday that the purchasing managers' index (PMI) rose to 47.8 in September from 47.6 in August.
The European Central Bank's new government bond purchase program may last only for a few years, ECB Governing Council member Christian Noyer told Frankfurter Allgemeine Zeitung in an interview published Thursday.
Noyer, who heads the Bank of France, said he hoped that the impact of the program would be felt very quickly. "I would be surprised if such a program" is in place for several years, he told the magazine.
The European Union's Internal Market Commissioner Michel Barnier reportedly said on Thursday that he will work to find a compromise with Germany on the proposal for a banking union.
Banks' shareholders must be ready to take on more risk in banking operations without burdening the government and the tax payers, European Central Bank Governing Council member Erkki Liikanen said in an interview to newspaper Demokraatti.
It is the task of the shareholders and investors to ensure that the banks operate in such a way as to avoid losses, Liikanen, who heads the Bank of Finland, said.
Spain conducted a successful bond auction on Thursday, with borrowing costs falling amid hopes the country will request aid paving the way for the European Central Bank to purchase sovereign debt.
In the first bond auction held by Spain after the European Central Bank announced its new bond purchase plan earlier this month, the treasury raised EUR 4.8 billion from the sale of its benchmark 10-year bond and a new 3-year bond. The target set for the sale was between EUR 3.5 billion and EUR 4.5 billion.
The yield on the January 2022 bond dropped to 5.666 percent from 6.647 percent paid in the previous sale on August 2.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.62 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.15 percent.
The DAX of Germany dropped by 0.02 percent and the CAC 40 of France finished lower by 0.62 percent. The FTSE 100 of the U.K. fell by 0.57 percent and the SMI of Switzerland decreased by 0.22 percent.
In Frankfurt, Commerzbank fell by 4.51 percent and Deutsche Bank lost 1.44 percent. Deutsche Bank confirmed that it reached agreement to sell private bank unit BHF-BANK to Kleinwort Benson Group, a unit of Belgium-based financial services group RHJ International, for 384 million euros.
BMW and Volkswagen finished down by 3.24 percent and 0.53 percent. Shares of Daimler declined by 2.22 percent. Daimler has said that it sees increasingly difficult market conditions in Europe.
Hawesko Holding decreased by 1.22 percent, after Berenberg started the stock with a "Hold" rating.
Sky Deutschland climbed by 1.12 percent, after Barclays initiated the stock with an "Overweight" rating.
Sartorius gained 1.52 percent, after Berenberg initiated the stock with a "Buy" rating.
In Paris, Total declined by 1.59 percent, amid falling oil prices.
Renault dropped by 2.12 percent and Peugeot fell by 3.29 percent. Peugeot announced exclusive negotiations to sell 75 percent interest in its Gefco trucking unit to JSC Russian Railways for 800 million euros. The sale is aimed at reducing debt.
BNP Paribas fell by 1.54 percent, Societe Generale lost 2.26 percent and Credit Agricole closed lower by 1.09 percent.
Miners are notably lower in London. Rio Tinto declined by 2.67 percent and Eurasian Natural Resources fell by 3.86 percent. Anglo American dropped by 4.42 percent, Kazakhmys decreased by 3.40 percent and BHP Billiton lost 2.28 percent.
Imperial Tobacco increased by 2.70 percent. The company expects to report about 4 percent rise in fiscal 2012 tobacco net revenues at constant currency.
Eurozone private sector activity fell to a 39-month low in September, a survey showed, and the deterioration witnessed over the last few months signal that the single currency region is clearly heading into a severe recession.
The composite output index, which measures activity in the manufacturing sector and the service sector, fell unexpectedly to 45.9 from 46.3 in August, preliminary data released by Markit Economics showed Thursday.
Eurozone consumer confidence unexpectedly declined in September, down for the fourth straight month, preliminary data from the European Commission showed Thursday. The consumer confidence indicator for the 17-nation economy slid to -25.9 from -24.6 in August. Economists had expected the index to climb to -24.
Activity in Eurozone's manufacturing sector decreased at a slower pace in September, data released by Markit Economics showed Thursday. The seasonally adjusted purchasing managers' index (PMI) for the manufacturing sector rose to a six-month high of 46 in September from 45.1 in August, but remained below the no-change 50 mark that separates growth from contraction. Economists expected to index to rise to 45.5.
Germany's manufacturing sector contracted further in September, though at a slower rate, data from a survey by Markit Economics showed Thursday. The seasonally adjusted purchasing managers index (PMI) for the manufacturing sector rose to 47.3 in September from 44.7 in August, and hit the highest level in six months.
Germany's producer price inflation accelerated more than economists expected in August, data released by statistical office Destatis showed Thursday. The producer price index increased 1.6 percent on an annual basis in August, notably faster than the 0.9 percent gain seen in July. Economists were looking for a 1.5 percent growth.
The French private sector shrank at the fastest pace since April 2009 driven by a marked decline in incoming new business, survey data from Markit Economics showed Thursday. The flash composite output index fell to 44.1 in September from 48 in August.
U.K. retail sales, including auto fuel, fell 0.2 percent month-on-month in August, data from the Office for National Statistics showed Thursday. Economists had forecast a 0.3 percent drop following a 0.3 percent rise in July.
While the Labor Department released a report on Thursday showing a modest drop in first-time claims for U.S. unemployment benefits in the week ended September 15th, jobless claims still came in above economist estimates.
The report showed that jobless claims edged down to 382,000 from the previous week's revised figure of 385,000. Economists had expected jobless claims to drop to 373,000 from the 382,000 originally reported for the previous week.
Manufacturing firms in the mid-Atlantic region reported nearly flat business activity in September, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday, with the index of activity in the sector rising much more than expected.
The Philly Fed said its diffusion index of current activity rose to a negative 1.9 in September from a negative 7.1 in August. While a negative reading still indicates a contraction in regional manufacturing activity, economists had expected the index to show a more modest increase to a negative 4.0.
After reporting a notable increase by U.S. leading economic indicators in the month of July, the Conference Board released a report on Thursday showing an unexpected decrease by its leading indicators index in the month of August.
The Conference Board said its leading economic index edged down by 0.1 percent in August following a revised 0.5 percent increase in July. The drop surprised economists, who had expected the index to come in flat compared to the 0.4 percent increase originally reported for the previous month.
by RTT Staff Writer
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