European Stocks Down as US Report Dims Outlook

European Stocks Down as US Report Dims Outlook

(AP) European stocks down as US report dims outlook
Associated Press
European stock markets had a poor start to the week after a disappointing U.S. jobs report on Friday dimmed the outlook for the world’s largest economy.

Britain’s FTSE 100 shed 0.6 percent in Monday afternoon trading to 5,627.11. France’s CAC-40 dropped 0.4 percent at 3,156.66 while Germany’s DAX was down 0.2 percent at 6,394.94.

U.S. markets opened lower with the Dow Jones Industrial Average dropping 0.5 percent at 12,710 and the S&P 500 index down by 0.4 percent to 1,349.

The U.S. economy added a less than expected 80,000 jobs last month, the Labor Department said Friday. The tepid employment growth, which followed the first drop in U.S. manufacturing in three years, increases pressure on the Federal Reserve to implement monetary stimulus measures known as quantitative easing.

All eyes in Europe on Monday were on an EU financial ministers meeting in Brussels later that day and Tuesday which is hoped to make significant progress on a bailout loan for Spain’s teetering banks.

The 17 countries that use the euro have committed to support a loan for the banks of up to (EURO)100 billion ($124 billion), but the precise amount needed may not be known until September.

European markets on Monday were spooked by news from Spain, where borrowing costs on its benchmark 10-year bond hit 7 percent. The interest rate on the country’s 10-year bond rose 0.13 percent Monday morning to a level that market-watchers consider unaffordable for a country to raise money on the bond markets in the long term. Spain’s IBEX-35 index dropped 0.5 percent in afternoon trading to 6,707.7.

In crisis-hit Greece, a new three-party coalition government won a vote of confidence in parliament early Monday, ending a period of uncertainty that led to two elections in less than two months. Greece, however, still has a long way to go to emerge from a deep recession and pay down its huge debt.

Asia closed lower on Monday. Japan’s Nikkei 225 index fell 1.4 percent and Hong Kong’s Hang Seng slid 1.9 percent. South Korea’s Kospi slipped 1.2 percent and China’s Shanghai Composite tumbled 2.4 percent to 2,170.81.

Inflation figures for China released Monday showed the consumer price index at its lowest since January 2010. That will give Beijing leeway to continue adding stimulus to fight an economic slowdown.

Benchmark oil for August delivery was down 1 cent at $84.41 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell $2.77 cents to settle at $84.45 on Friday in New York.

In currencies, the euro inched down to $1.2280 from $1.2285 on Friday in New York. The dollar was little changed at 79.65 yen from 79.68 yen.


Alex Kennedy contributed to this report from Singapore.