The European markets ended Monday's session in negative territory. A number of issues contributed to the weakness today, but most stemmed from concerns over global growth. One notable factor was the continued to decline in the German Ifo business sentiment. There were also reports of differences of opinion between Germany and France, over plans to monitor Europe's crisis-hit banks.
Growth worries from China also garnered investor attention after Song Guoqing, an academic adviser to the People's Bank of China, said he saw no signs of a rebound in the third quarter and domestic investment is unlikely to expand dramatically in the short term.
Eurozone countries are planning to increase the size of the region's permanent bailout fund dramatically, Germany's Der Spiegel reported Sunday.
The governments are preparing to quadruple the capacity of the European Stability Mechanism (ESM) to EUR 2 trillion from the current EUR 500 billion, the magazine reported citing a Finance Ministry spokesperson.
Backing calls for more lenient bailout terms for Greece, French Prime Minister Jean-Marc Ayrault said in an interview to a French news website over the weekend that the embattled euro member should be allotted more time to cut its budget deficit and implement the planned reforms.
Talking to the news website Mediapart, Ayrault said he favored giving Greece more time to pull through the crisis on condition that it remains sincere in its commitment to reform, particularly the fiscal ones.
Policy makers at the European Central Bank (ECB) are unlikely to cut interest rates further, given the high inflation rate and improvement in euro-area's economic outlook, European Central Bank Executive Board member Benoit Coeure said Sunday.
Speaking to reporters after attending a conference on the Palestinian economy, Coeure said "It is not absolutely obvious that another rate cut would be necessary in the light of recent economic indicators and in light of inflation developments."
The German economy will continue its upward trend amid high uncertainty, the Bundesbank said in its monthly report for September. The economy made a good start to the summer quarter, it said. Household consumption and construction activity remain robust.
The central bank, however, warned that future development is subject to great uncertainty. The labor market is showing signs of a weaker economy, the bank added.
Italy has taken huge effort to speed up long-overdue economic reforms but it is now essential to maintain the momentum, Angel Gurría, Secretary-General of the Organisation for Economic Co-operation and Development said Monday.
"Resolute implementation and continuation of the reforms are crucial," he said at a joint OECD-Italian government conference in Rome. "The success of Italy in overcoming these challenges will be decisive not only for the Italian people but for Europe as a whole." According to him, reforms initiated by the Italian government could lift the economic growth by up to 4 percent over the coming 10 years. Continuing the reform process would boost growth even more.
The Bank of England's Financial Policy Committee maintained its policy recommendations on September 14.
"The committee judged that the risks to financial stability hadn't altered sufficiently since its previous meeting to warrant a change to its current set of policy recommendations," the BoE said in a statement on Monday.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.74 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, finished down by 0.21 percent.
The DAX of Germany dropped by 0.52 percent and the CAC 40 of France lost 0.95 percent. The FTSE 100 of the U.K. fell by 0.24 percent and the SMI of Switzerland decreased by 0.13 percent.
In Frankfurt, Commerzbank sank by 3.49 percent after Nomura downgraded the stock to "Reduce" from "Neutral." Deutsche Bank lost 0.85 percent.
UBS downgraded its rating on shares of E.ON to "Neutral" from "Buy." The stock declined by 0.50 percent.
Rhoen-Klinikum fell by 0.99 percent, even though Commerzbank raised its rating on the hospital operator.
Software AG dropped by 2.43 percent, after a downgrade by Societe Generale.
Geophysical firm CGGVeritas has entered into an agreement with Fugro to acquire its Geoscience Division, excluding the existing Multi-Client library and nodes businesses for 1.2 billion euros in cash. CGG sank by 13.10 percent.
In Paris, Credit Agricole decreased by 2.37 percent. BNP Paribas lost 1.51 percent and Societe Generale finished down by 1.64 percent.
In London, Anglo American lost 2.61 percent and Antofagasta fell by 1.25 percent. Eurasian Natural Resources declined by 4.03 percent and Rio Tinto dropped by 2.01 percent.
Royal Bank of Scotland fell by 1.56 percent and Barclays declined by 1.56 percent.
JJB Sports surged by 13.89 percent. The company's board has determined that any sale of the trade, assets and brands would be affected through an administration process. It is anticipated that the process to begin the appointment of administrators of the company would begin today.
Swiss bakery business Aryzta reported a decline in fiscal 2012 profit, while revenues were benefited by improved performance in the food business. The stock dropped by 3.04 percent.
German business sentiment declined for the fifth consecutive month in September suggesting that even the bond purchase programme announced by the European Central Bank failed to shore up confidence.
The business climate index fell to 101.4, which was the lowest since March 2010, from 102.3 in August, the survey based on 7,000 executives by the Ifo Institute showed Monday. The index was forecast to remain unchanged at 102.3.
UK's household finances continued to deteriorate in September as the overall sentiment turned more downbeat mainly due to a sharp increase in inflation perceptions, data from a survey by Markit Economics showed Monday.
The headline household finance index, which measures respondents' views of their present financial situation, declined to 38.4 in September from the 20-month high of 38.9 in August.
by RTT Staff Writer
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