European Indexes Slide, German Outlook Lowered

Arthi Gupta
22 Oct, 2012
New York City

The European indexes edged lower on weak Japanese trade data. Euro area government deficit dropped in 2011. The German economy is estimated to shrink in the fourth quarter. The UK household finance index rose in October.

[R]7:00 PM Frankfurt – The European indexes edged lower on weak Japanese trade data. Euro area government deficit dropped in 2011. The German economy is estimated to shrink in the fourth quarter. The UK household finance index rose in October.[/R]

European indexes closed lower after Japanese exports declined for the fourth month in a row in September and fell 21.2% to the European Union and German growth outlook for the fourth quarter is lowered.

Japan’s trade deficit was 558.555 billion yen in September, the Ministry of Finance said and exports slumped 10.3% from a year to 5.359 trillion yen.

The German economy is expected to expand in the third quarter but is likely to stagnate or even contract slightly in the final quarter of the year, Bundesbank said in its monthly report today.

In another report, the German Finance Ministry stated that the country’s economic growth is likely to slowdown in the last quarter of 2012, driven by the weak economic developments in some euro area nations.

Spanish Prime Minister Mariano Rajoy has still not decided to formally request a bailout or not and in regional elections in Spain Rajoy’s party won 41 of the 75 seats in the Galicia region.

Separately, Spain''s two biggest labor unions have called for a general strike for November 14 to protest against the government''s austerity measures.

In Paris trading, the CAC-40 Index fell 21.31 or 0.6% to 3,483.25 and in Frankfurt the DAX Index edged lower 52.59 or 0.7% to 7,328.05.

The yields on Spain’s benchmark 10-year rose nine basis points to 5.46%. Italian 10-year yields were at 4.75%.

Euro Zone Deficit Drops

In 2011, the government deficit of both the euro area and the EU27 decreased in absolute terms compared with 2010, while the government debt rose in both zones, data released by Eurostat showed today.

In the euro area the government deficit to GDP ratio decreased from 6.2% in 2010 to 4.1% in 2011, and in the EU27 from 6.5% to 4.4%.

In the euro area the government debt to GDP ratio increased from 85.4% at the end of 2010 to 87.3% at the end of 2011, and in the EU27 from 80% to 82.5%.

German Leading Index Drops

The Conference Board Leading Economic Index for Germany declined for a sixth consecutive month in August, as large declines in consumer confidence and new orders in investment goods industries more than offset positive contributions from stock prices and the yield spread.

The leading economic index decreased 0.3% on a monthly basis to 102.3 in August.

The Conference Board Coincident Economic Index remained unchanged in August.

UK Household Finance Index Rises

There was the slowest deterioration in the UK’s household finances since December 2010, data from a survey by Markit Economics showed.

The headline household finance index rose to 39 in October from 38.4 in September.

Spanish Housing Mortgages Fall

The number of mortgaged dwellings in Spain fell 13.1% to 21,106 from a month ago but plunged 28.5% annually in August, according to a report released by the statistics office INE.

In the case of mortgages constituted for dwellings, the average amount was €103,592, 3.3% less than in August 2011, but rose 4.8% higher from July.