European Markets Fall 2% on Rising Global Uncertainties

Nigel Thomas
23 May, 2013
New York City

European market indexes plunged more than 2% on the rising global uncertainties. U.K. GDP increased at 0.3% rate in the first quarter and yields on Spanish and Italian bonds rose.

[R]3:30 PM Frankfurt – European market indexes plunged more than 2% on the rising global uncertainties. U.K. GDP increased at 0.3% rate in the first quarter and yields on Spanish and Italian bonds rose.[/R]

European markets plunged more than 2% after a sharp selloff in Asian markets on the worries that the U.S. Fed may withdraw stimulus earlier than expected.

Market indexes in the European Union fell the most in ten months.

In London trading, FTSE 100 index dropped 2.3% or 158.48 to 6,682 and in Frankfurt the DAX index declined 2.3% or 197.8 to 8,333.

In Paris, CAC 40 index plunged 2.2% or 89.33 to 3,962. Markets in Portugal, Greece and Switzerland declined more than 2%.

Market indexes plunged in Tokyo after the latest Chinese survey indicated manufacturing industry growth contracted and U.S. Federal Reserve comments raised the specter of stimulus unwinding.

Every member of the Nikkei index declined for the first time since the aftermath of earthquake and tsunami in 2011.

The latest preliminary Chinese manufacturing survey conducted by HSBC showed that the sector shrank for the first time in seven months.

U.K.’s gross domestic product increased 0.3% in the first quarter according to the data released by the Office for National Statistics. The economic growth picked up after consumer spending increased and companies built inventories offsetting a decline in exports.

Spain completed the sale of 3-year and 10-year bonds totaling €4.08 billion as yields on Spanish and Italian bonds rose on the rising global uncertainties.

The yield on 10-year Spanish bonds increased 16 basis points to 4.12% and Italian bonds rose 17 basis points to 4.09%.

Stocks in Review

SABMiller Plc slipped 1.9% to 3,469.50 pence after the UK based brewery and beverage maker reported group revenue for the year ending in March climbed 10% to $34.49 billion. Profit for the year plunged 22% to $3.51 billion compared to $4.48 billion and diluted earnings per share dropped $2.04 from $2.64.

Group revenue in the year from Latin America jumped 9% to $7.82 billion and revenue from Europe and Africa each rose 5% to $5.77 billion and $3.85 billion respectively. South Africa group revenue dropped 5% to $6 billion.

St. James’s Place plc plunged 11.2% to 568.50 pence after the Lloyds Banking Group sold 77 million shares at 580 pence per share for total proceeds of £450 million.

SBM Offshore NV climbed 2.4% to €14.05 after the Netherlands based offshore energy producer said consolidated revenue in the first quarter surged 35% to $1 billion.

The company agreed to decommission the Yme platform and terminate the contract at a cost of $470 million and order portfolio jumped 49% to record level of $21 billion. Order intake jumped 14% to $7.85 billion.

The company expects annual sales to increase nearly 8% to $4 billion.

Roche Holdings AG declined 3% and Novartis AG declined 2.6%.