European Markets Dropped On Chinese Data & U.S. Concerns
(RTTNews.com) - The European markets ended Tuesday's session in negative territory. Investor sentiment was impacted by some weaker than expected Chinese service sector data. Investors also continue to watch the situation in Washington very closely, as the partial shutdown of the U.S. government reached its eighth day.
Democrats and Republicans continue to hold their ground as the October 17 deadline approaches for raising the nation's debt ceiling. Democrats continue to urge House Speaker John Boehner to bring a "clean" spending bill to the floor for a vote, while Republicans are still demanding concessions from the White House.
The growth in the Chinese service sector moderated in September, with the expansion hovering substantially below trend, a closely watched private survey revealed Tuesday. The HSBC/Markit services business activity index fell to 52.4 in September from 52.8 in August.
Bank of France on Tuesday cut its growth forecast for the third quarter given the lack of improvement in business sentiment in the backdrop of weaker-than-normal order book levels.
The bank lowered the third quarter GDP growth forecast to 0.1 percent from 0.2 percent seen earlier, results of a survey revealed. The estimate is based on the bank's monthly index of business activity. The French economy grew 0.5 percent in the second quarter, following a 0.1% contraction in the first three months of the year.
The British Chambers of Commerce on Tuesday said the U.K. recovery is strengthening, but significant challenges remain.
The latest Quarterly Economic Survey showed improvements in most key areas for both manufacturing and services in the third quarter compared with the second quarter, with many balances stronger than their long-term historical averages.
The lobby forecasts economic growth to be around 0.9 percent to 1 percent in the third quarter. David Kern, chief economist at the BCC said the full-year forecasts for 2013 and 2014 are likely to be revised up further. But the BCC observed that it is too early to declare that the recovery is now secure.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.52 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.77 percent.
The DAX of Germany dropped by 0.42 percent and the CAC 40 of France fell by 0.77 percent. The FTSE 100 of the U.K. decreased by 1.11 percent and the SMI of Switzerland lost 0.76 percent.
In Frankfurt, Commerzbank declined by 1.83 percent and Deutsche Bank fell by 0.51 percent.
Celesio surged by 20.04 percent, on reports that McKesson Corp. is involved in advanced talks to acquire the company.
QSC climbed by 4.19 percent, after Commerzbank upgraded the stock to ''Buy'' from ''Add.''
Merrill Lynch reinitiated Hugo Boss with a ''Neutral'' rating. The stock rose by 0.50 percent.
Bayer finished lower by 0.64 percent. The pharmaceutical giant plans to bring five drug candidates into phase III clinical studies by 2015.
In Paris, GDF Suez dropped by 1.69 percent. Citigroup downgraded the stock to ''Neutral'' from ''Buy.''
Alcatel Lucent fell by 4.05 percent, after announcing the elimination of 10,000 jobs.
In London, Marks & Spencer fell by 3.44 percent. Bernstein downgraded its rating on the stock to ''Underperform'' from ''Market Perform.'' Kingfisher decreased by 1.85 percent and Next lost 1.49 percent.
Mining stocks turned in a weak performance, due to the disappointing Chinese data. Anglo American declined by 1.45 percent and BHP Billiton lost 1.86 percent. Rio Tinto decreased by 0.78 percent and Glencore Xstrata fell by 1.25 percent.
Somero Enterprises climbed by 12.41 percent, after the company said it currently expects second-half profitability to exceed the first half due to closing of orders in September.
Trakm8 Holdings surged by 53.85 percent, after the developer of GPRS-based hardware and software announced its proposed acquisition of BOX Telematics Limited for an initial cash consideration of 3.5 million pounds.
Givaudan declined by 2.07 percent in Zurich, after it was downgraded by Exane BNP.
Novartis fell by 1.25 percent, after JPMorgan downgraded the stock to ''Neutral'' from ''Overweight.''
Clariant advanced by 0.58 percent, after HSBC upgraded the stock to "Neutral" from "Underweight."
Telecom Italia fell by 1.75 percent in Milan, after Standard & Poor's placed it on CreditWatch negative.
German factory orders declined unexpectedly in August due to a fall in euro area demand, while overall shipments from the largest Eurozone nation recovered from July. Confounding expectations for a 1.1 percent rise, factory orders logged a 0.3 percent month-on-month drop in August. This was the second consecutive decrease in orders, figures published by the Federal Ministry of Economics and Technology revealed Tuesday. Nonetheless, the rate of decline was slower than the 1.9 percent drop seen in July.
Germany's overall exports recovered in August from July, while the growth in imports increased marginally, data from the Federal Statistical Office showed Tuesday.
Exports advanced 1 percent month-on-month, offsetting July's 0.8 percent fall. Meanwhile, imports rose 0.4 percent, slightly faster than the 0.3 percent increase seen in July.
Despite an increase in exports, the foreign trade surplus declined to EUR 13.1 billion in August from EUR 16.2 billion in July. On a seasonally and calendar adjusted basis, the surplus totaled EUR 15.6 billion.
France's visible trade deficit decreased moderately in August from the previous month, latest figures from the country's customs office showed Tuesday. The balance of trade for August was a deficit of EUR4.9 billion, slightly lower than the EUR5.1 billion shortfall seen a month earlier. Economists were looking for a deficit of EUR5 billion for August.
The total value of like-for-like retail sales in the United Kingdom was up 0.7 percent on year in September, the British Retail Consortium said on Tuesday. That was well shy of forecasts for an increase of .0 percent following the 1.8 percent gain in August.
An index measuring the average price of a house in the United Kingdom came in with a score of 54 in September, the Royal Institute of Chartered Surveyors said on Tuesday. That marked the fastest rate of increase in 11 years, RICS said, as sales also touched a four-year high. Every region of the country except the North East saw an increase. The headline figure blew past forecasts for 45 following the upwardly revised 41 in August.
Job placements in the United Kingdom continued to increase strongly in September, though at a slightly weaker pace than August's forty-month high, survey data released by the Recruitment and Employment Confederation (REC) and KPMG showed Thursday.
The number of permanent staff placed in jobs by recruitment consultants increased sharply in September. The pace of expansion was only slightly slower than July's 40-month high.
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