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European Markets Declined On Fiscal Cliff Worries

Investor concerns over the ongoing budget negotiations in the United States continued to weigh on the European markets on Monday. Democrats and Republicans continue to work towards a solution on the fiscal cliff, with the end of the year nearly upon us. A number of markets were closed today for the New Year's Eve holiday, while markets in Paris and London were open for half day sessions.

French President Francois Hollande's initiative to impose higher taxes on the rich suffered a setback after the country's Constitutional Council on Saturday rejected the proposal, media reports said.

The French government had put up the measure to impose a tax rate as high as 75 percent on the country's rich people, making them contribute more to the ongoing effort to reduce the public debt. The proposal, which was the highlight of Hollande's election campaign, called for 75 percent tax on annual income above EUR 1 million.

The government is planning to redraft the proposal to impose high tax on the rich and resubmit it in a new budget law. The rejection of the measures will have likely cut EUR300-500 million from the forecast tax revenues next year, sources said.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.34 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.29 percent.

The CAC 40 of France declined by 0.90 percent and the FTSE 100 of the U.K. fell by 0.47 percent. The DAX of Germany and the SMI of Switzerland were both closed for the holiday.

In Paris, Societe Generale dropped by 1.87 percent. Credit Agricole decreased by 1.30 percent and BNP Paribas lost 1.96 percent.

In London, HSBC finished down by 0.68 percent. Lloyds Banking Group dropped by 1.58 percent and Royal Bank of Scotland dipped by 0.06 percent.

Mining stocks also turned in a weak performance. Vedanta Resources fell by 0.34 percent and Rio Tinto lost 0.68 percent. Anglo American dropped by 0.53 percent and Antofagasta finished lower by 1.19 percent. BHP Billiton decreased by 0.70 percent and Eurasian Natural Resources lost 0.73 percent.

North River Resources declined by 1.9 percent. The company announced the resignation of David Steinepreis as Managing Director and a board director, effective immediately.

ViaLogy increased by 6.13 percent, despite a wider first-half loss.

Greece's retail sales declined for the fourteenth successive month in October, provisional data released by the Hellenic Statistical Authority showed Monday. Retail sales volume, excluding automotive fuel, fell at a faster pace of 16.8 percent year-on-year in October than 11.8 percent in September. Sales declined for the fourteenth month in a row.

An indicator of China's manufacturing sector performance rose to its highest level in 19 months in December, suggesting that economic recovery is taking hold after more than two years of lackluster performance.

The HSBC manufacturing purchasing managers' index rose to 51.5 in December from 50.5 in November. This was higher than the flash reading of 50.9.

by RTTNews Staff Writer

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