Greek Economy Contracts 7.2%, UK Jobless Rate Falls

Arthi Gupta
14 Nov, 2012
New York City

The European indexes declined. Italy sold

[R]3:50 PM Frankfurt – The European indexes declined. Italy sold €3.5 billion of three-year bonds at lower borrowing costs. Euro zone output fell in September and the UK jobless claims rose in October. Greek economy contracts in the third quarter.[/R]

The European indexes edged lower on the growing fiscal concerns in the region. Domestic economic data did not lift investor sentiment with economic growth contracting in Greece and Portugal in the third quarter.

The UK jobless claims rose despite a decline in the jobless rate and euro area production fell in September.

General strikes across Europe have paralyzed the region with unions in Spain and Portugal protesting against the austerity measures. Greece, Italy and France too contemplated strikes against the fresh austerity measures.

Finance ministers of the euro area are scheduled to meet on November 20 for finalization of the next tranche of the Greek loans.

The UK gross domestic product is estimated to have increased 1% in the third quarter, according to the quarterly Inflation Report published by the Bank of England today. The bank stated that headline growth is consequently likely to fall back sharply in the fourth quarter.

In Paris trading, the CAC-40 Index declined 15.93 or 0.5% to 3,415.13 and in Frankfurt the DAX Index edged lower 27.43 or 0.4% to 7,141.78.

The yields on Spain’s benchmark increased two basis points to 5.87%. Italian 10-year yields fell one basis point to 4.96%.

Italian Bond Auction

The Italian Treasury sold €3.5 billion or $4.5 billion of its benchmark three-year bond today at an average yield of 2.64% compared to an average yield of 2.86% at a similar auction on October 11. The bid-to-cover ratio fell to 1.5 from 1.67 last month.

The Treasury auctioned €1.5 billion of debt due in 2023 at an average yield of 4.81% with the bid-to-cover ratio of 1.51.

The nation also sold bonds due in 2029 at an average yield of 5.33% with the bid-to-cover ratio of 1.48.

Euro Zone Output Drops

Seasonally adjusted industrial production fell 2.5% in the euro area in September compared with August and by 2.3% in the EU27, according to estimates released by Eurostat, the statistics office of the European Union today.

In August, production increased 0.9% and 0.5% in the euro area and in the EU27 respectively

On a yearly basis, industrial production dropped by 2.3% in the euro area and by 2.7% in the EU27.

UK Jobless Claims Rise

The number of persons claiming jobseeker''s allowance in the UK rose by 10,100 in October from September to 1.58 million, the Office for National Statistics said today.

The claimant count rate remained unchanged at 4.8% in October.

The unemployment rate, according to the ILO measure, was 7.8% in July to September, down 0.2 points from the April to June period. There were 2.51 million unemployed people in July to September period, down 49,000 from April to June and down 110,000 on a year earlier.

Greek Economy Contracts

The Greek gross domestic product decreased 7.2% annually in the third quarter compared to the 6.3% decline in the second quarter, preliminary data from the Hellenic Statistics Authority showed.

Portuguese Economy Shrinks

The Portuguese gross domestic product decreased 0.8% sequentially in the third quarter, following a 1.1% drop in the second quarter, preliminary data from Statistics Portugal showed.

On an annual basis, GDP declined 3.4% in the third quarter compared to the 3.2% fall in the second quarter.

Separately, Portugal''s unemployment rate rose to 15.8% in the third quarter from 15% in the second quarter. In the third quarter of 2011, the jobless rate was 12.4%.