Europe wilts on US data

Wed, 30 Apr 2008

European stock exchanges wilted on Tuesday, with sentiment dented by losses suffered at Deutsche Bank and by data from the United States renewing fears for the health of the world's largest economy.

The London FTSE 100 index managed to resist the slide, bouyed by strong showings in the oil sector, and closed with a loss of just 0.02 percent at 6089.40.

In Paris the Cac 40 fell 0.71 percent to 4977.10 while in Frankfurt the Dax lost 0.58 percent to finish at 6885.34 points.

The Euro Stoxx 50 index of leading eurozone shares fell 0.55 percent to reach 3793.63.

Wall Street stocks lost ground in mid-day trade as a weak reading on consumer confidence and a survey showing steeper home price declines made buyers cautious.

The Dow Jones Industrial Average was down 0.35 percent at 12 826.40 while the Nasdaq had retreated 0.28 percent to 2417.69.

The declines in New York and Europe came as the Conference Board, a business research group, reported that US consumer confidence sank again in April amid growing worries about jobs and high energy costs.

It said its index of consumer confidence fell to 62.3 from 65.9 in March.

"This continued weakening suggests that not only has the feeble level of growth in the first quarter spilled over into the second quarter, but that economic conditions may have slowed even further," said Lynn Franco, director of the Conference Board consumer research center.

Meanwhile a separate survey showed home prices in major US cities slumped an average of 12.7 percent year-to-year in February.

The Standard & Poor's/Case-Shiller index of prices in 20 major cities showed a 14th consecutive month of declines, as the market meltdown extended.

"There is no sign of a bottom in the numbers," said David Blitzer, chairman of the index committee at Standard & Poor's.

Investors around the world were also awaiting the outcome of a two-day Federal Open Market Committee (FOMC) meeting set to open Tuesday.

Most analysts expect a quarter-point cut in the base lending rate to 2.0 percent and a signal that the central bank is ready to pause after aggressively cutting rates since September.

But a few analysts think the Fed might not cut rates at all.

"The big question everyone is talking about is whether the Fed has enough backbone to recognize that the bond market is right and the Fed should not ease tomorrow," said Andrew Busch at BMO Capital Markets.

"This would have the dual felicitous effect of rallying the US dollar and putting downward pressure on oil."

In London the big winners were oil groups BP and Shell, which reported huge profit gains in the first quarter on record crude oil prices.

BP surged 5.96 percent to 613 pence while Shell shot up 5.82 percent to 2035 pence.

Mining issues by contrast were hurt by a disappointing business report from Anglo American, which highlighted the impact of electricity outages and floods in South Africa that have affected production of platinum and coal.

Anglo American shed 2.75 percent to close at 3249 pence while Rio Tinto lost 3.47 percent and finished at 6010 pence.

In Paris, tyremaker Michelin plunged 9.18 percent to 60.62 euros after revising downward its operating projections for this year, which it attributed to a slowdown in its key markets and rising commodity prices.

The Michelin results affected automakers Renault, which lost 2.13 percent to close at 66.31 euros, and Peugeot, which fell 2.57 percent to 44.65 euros.

In Frankfurt, Lufthansa shed 1.05 percent to reach 17.95 euros following press reports that it is interested in Brussels Airlines. The German air carrier declined to comment.

Deutsche Bank fell 0.76 percent to 76.19 euros on news of its quarterly loss.

Elsewhere there were declines of 0.32 percent to 31 841 on the SP/Mib in Milan, 1.17 percent to 7462 on the Swiss Market Index, 1.23 percent to 13 707.2 on the Ibex-35 in Madrid, 0.84 percent to 3908.3 on the Bel-20 in Brussles and 0.21 percent to 471.22 on the AEX in Amsterdam.

In Asia on Tuesday, Hong Kong's key Hang Seng index closed up 0.97 percent at 25 914.15 points. The Japanese market was closed for a one-day national holiday.