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European Markets Pulled Back On U.S. Fiscal Cliff Concerns

The European markets finished to the downside Friday, due to the stalemate in budget negotiations in the United States. With the end of the year rapidly approaching, Democrats and Republicans appear less likely to come to an agreement to come to an agreement on the fiscal cliff. Investor concerns over the situation applied pressure to shares of financial stocks at the end of the trading week.

Greece's four largest banks need EUR 27.5 for recapitalization, the country's central bank said in a report published Thursday. These banks, identified as "core banks", were National Bank of Greece, Eurobank, Alpha Bank and Piraeus Bank.

The Bank of Greece said that the EUR 50 billion earmarked for bank recapitalization in February this year is adequate. The recapitalization needs of Greece's overall banking sector amounted to EUR 40.5 billion, according to the central bank estimates.

The Spanish Central bank, in its latest quarterly bulletin, said that the economy has contracted further in the fourth quarter, deepening the ongoing recession, as economic activity continues to be dragged down by high unemployment and the banking crisis.

British employees are facing a 'hard slog year' ahead with higher unemployment, longer working hours and continued squeeze in wages, a report from the Jobs Economist said Friday.

Another report from the Chartered Institute of Personnel and Development, meanwhile, said that employment in the U.K. is set to grow further in 2013 and will likely reach the historic milestone of 30 million.

According to Jobs Economist, fewer jobs will be created in 2013 than this year and those in employment can expect to work longer hours without extra real reward, despite a somewhat stronger economic growth.

British Prime Minister David Cameron's attempts to claw back powers from Brussels could inflict serious damage to the single market and could even cause the EU to fall apart, European Council President Herman Van Rompuy was quoted as saying on Friday.

In an interview to the Guardian newspaper, Van Rompuy said "if every member state were able to cherry-pick those parts of existing policies that they most like, and opt out of those that they least like, the union in general, and the single market in particular, would soon unravel."

"All member states can, and do, have particular requests and needs that are always taken into consideration as part of our deliberations. I do not expect any member state to seek to undermine the fundamentals of our co-operative system in Europe," he told the newspaper.

The Euro Stoxx 50 index of eurozone bluechip stocks declined by 1.23 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.58 percent.

The CAC 40 of France dropped by 1.47 percent and the DAX of Germany fell by 0.57 percent. The FTSE 100 of the U.K. decreased by 0.49 percent and the SMI of Switzerland finished down by 0.58 percent.

In Frankfurt, Porsche surged by 6.25 percent. A U.S. court dismissed a lawsuit brought against the auto-maker by 26 hedge funds, which accused the company of causing over $1 billion in damages, due to its 2008 attempt to acquire Volkswagen.

Commerzbank dropped by 1.51 percent and Deutsche Bank lost 0.95 percent.

In Paris, Societe Generale decreased by 2.60 percent. Credit Agricole lost 1.78 percent and BNP Paribas fell by 2.53 percent.

Vinci sank by 2.31 percent. The company was selected by the Portuguese government to acquire ANA.

In London, mining stocks turned in a weak performance. Anglo American declined by 0.88 percent and Fresnillo lost 1.33 percent. Vedanta Resources fell by 0.77 percent and Eurasian Natural Resources decreased by 1.14 percent.

Lloyds Banking Group dropped by 0.84 percent and Barclays declined by 1.30 percent.

Lonmin finished down by 2.63 percent, after CEO Ian Farmer stepped down from his position due to illness.

The Eurozone economy has likely contracted further in the fourth quarter and slid deeper into recession, the Eurocoin indicator compiled by the Center for Economic Policy Research and the Bank of Italy showed Friday.

The Eurocoin indicator, which estimates euro area's actual GDP growth, excluding seasonal variations and volatility in output, moved up to 0.27 percent in December from 0.29 percent each in November and October.

The index continued to remain in the negative territory, suggesting that the euro area economy is set to contract further the final months of 2012. The December figure, however, suggested that the rate of contraction has eased.

The French economy expanded only 0.1 percent in the third quarter from the prior quarter, final data from the statistical office Insee showed Friday. The third quarter growth was downgraded from 0.2 percent and follows a 0.1 percent fall in the second quarter.

French consumer spending recorded surprise improvement in November, data from the statistical office Insee showed Friday. The overall consumer spending was up 0.2 percent month-on-month in November, after a revised 0.1 percent fall in the previous month. Economists expected spending to remain unchanged.

Spanish retail sales decreased at a slower rate in November, and the rate of fall was below economists' forecast, latest data showed Friday. Retail sales decreased 7.8 percent on an annual basis in November, after falling 9.7 percent in the previous month, statistical office INE said. Economists were looking for a 10.3 percent fall.

Pending home sales in the U.S. rose for the third straight month in November, according to a report released by the National Association of Realtors on Friday, with the pending home sales index reaching its highest level in well over two years.

NAR said its pending home sales index rose 1.7 percent to 106.4 in November from a downwardly revised 104.6 in October. Economists had been expecting the index to increase by about 1.8 percent.

Chicago-area business activity expanded for the second consecutive month in December, according to a report released by the Institute for Supply Management - Chicago on Friday, with the Chicago business barometer rising by more than expected.

The ISM Chicago said its Chicago business barometer climbed to 51.6 in December from 50.4 in November, with a reading above 50 indicating an increase in business activity. Economists had expected the index to rise to 51.0.

by RTT Staff Writer

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