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European Markets Weakened Further On U.S. Fiscal Cliff Concerns

The European markets declined again on Friday, extending their losses from the previous two trading sessions. Bank stocks were among the weakest performers at the end of the week, but technology stocks performed well. The escalation of the conflict between Israel and Hamas in the Gaza strip has raised concerns that the situation could develop into all out war in the region.

The negotiations between U.S. President Obama and Congressional leaders began today, as they attempt to come to a solution on the impending fiscal cliff. Fears that the U.S. may fall back into recession if a deal is not reached to avoid the fiscal cliff have had a negative impact on the markets over the past few days.

International Monetary Fund Managing Director Christine Lagarde said the lender is committed to ensure that Greece economy return to a sustainable path. She will meet Eurozone leaders in Brussels on November 20 to forge a deal that would help Greece to get back on its feet.

The Euro Stoxx 50 index of eurozone bluechip stocks declined by 1.25 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.94 percent.

The DAX of Germany dropped by 1.32 percent and the CAC 40 of France fell by 1.21 percent. The FTSE 100 of the U.K. decreased by 1.27 percent and the SMI of Switzerland finished lower by 1.00 percent.

In Frankfurt, Henkel declined by 4.65 percent. The detergent maker reported higher quarterly profit, but said it expects the volatility and uncertainties in its markets to persist.

Commerzbank and Deutsche Bank fell by 4.97 percent and 3.76 percent, respectively.

JPMorgan upgraded Bayer to "Overweight" from "Neutral.'' The stock closed down by 0.17 percent.

In Paris, Credit Agricole decreased by 2.86 percent, while Societe Generale lost 2.80 percent and BNP Paribas fell by 2.59 percent.

In London, Melrose sank by 11.48 percent. The manufacturing buy-out specialist said revenue trends have slowed and sales outlook for 2013 has become more uncertain.

Evraz fell by 3.06 percent. Eurasian Natural Resources and Rio Tinto dropped 5.25 percent and 2.18 percent, respectively.

BP finished down by 2.07 percent. The oil giant agreed to pay about $4.5 billion to the U.S. government to settle criminal and securities claims over the 2010 Deepwater Horizon accident in the Gulf of Mexico that claimed 11 lives and led to a massive oil spill.

Serco Group climbed by 1.01 percent, after reporting results for the first half of the year.

Lloyds Banking Group declined by 3.77 percent and HSBC fell by 0.88 percent. Barclays decreased by 2.11 percent and Royal Bank of Scotland lost 1.70 percent.

Zurich Insurance fell by 1.03 percent in Zurich, following a broker downgrade.

The euro area current account surplus declined to EUR 0.8 billion in September from EUR 10.9 billion in August, the European Central Bank said Friday.

Eurozone trade surplus increased in September as the decline in imports exceeded the fall in exports, indicating that weak domestic demand was one of the factors behind the recent recession.

The trade surplus increased to EUR 9.8 billion in September from EUR 5.2 billion in August, data from Eurostat revealed Friday. The surplus was also bigger than a EUR 1.7 billion excess in September 2011. Economists had forecast a surplus of EUR 10 billion.

Confidence among British households about prices of their homes weakened at the most modest pace in twenty eight months in November, data from a survey by Markit Economics and Knight Frank showed Friday. The house price sentiment index increased to 47.6 in November from 45 in October, hitting the highest level since July 2010.

The U.S. manufacturing sector felt the impact of Superstorm Sandy last month, with industrial production hitting the skids after a modest rebound in September. Production fell 0.4 percent in October, according to figures released Friday morning by the Federal Reserve. The decline surprised economists, who had forecast a gain of 0.2 percent.

September production was also revised down to a 0.2 percent gain from the initial estimate of a 0.4 percent increase.

by RTT Staff Writer

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