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Europe Stocks Edge Down

Published: May 8, 2012 | 8:20 am
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LONDON—European stock markets were down Tuesday amid worries over Greece’s future as the country’s leaders failed to form a coalition government after the weekend’s elections.

Germany’s DAX index was down 0.3% at 6548, while France’s CAC 40 Index fell 1.1% to 3178.91.London’s FTSE 100 Index decreased by 0.2% to 5643.86, with traders in a cautious mood following Monday’s public holiday.

Traders noted continuing concerns about Europe’s debt problems following weekend elections in France and Greece. Although the outcome of the French election was largely priced-in by markets, the political gridlock in Greece after the election places pressure on market confidence. Greece’s leaders will begin cross-party talks to form a government, and with the chances for a coalition slim, a new set of elections is likely.

Michael Hewson, senior market analyst at CMC Markets, said that irrespective of what happens in the coming weeks for the country, “it looks increasingly impossible that Greece will be able to implement the types of reforms asked of it in the face of such voter opposition, increasing the likelihood that the country will have to leave the euro.”

But some positive signs have emerged since the start of the new week, offering traders a degree of relief. Cameron Peacock, an analyst at IG Markets, pointed to Fitch Ratings’ statement that François Hollande’s victory in France didn’t have any implications for the country’s triple-A rating, while “a Spanish government source suggested that measures to help the Spanish banking system would be announced on Friday, and that these measures could include the creation of a ‘bad bank’ with a 10- to 15-year expected life span.”

Looking ahead, Tuesday’s economic calendar is relatively light, with only German industrial production for March at 10 a.m. GMT and U.S. small business optimism data scheduled for 10 a.m. ET.

On Wall Street Monday, the Dow Jones Industrial Average fell 0.2% to 13008.53, while the Standard & Poor’s 500-stock index rose 0.1% to 1369.58 and the Nasdaq Composite rose 1.42 points, less than 0.1%, to 2957.76.

Asian stock markets were mixed Tuesday, with Japan rebounding after heavy losses yesterday and property shares pulling China lower on weakening expectations of imminent policy loosening.

Japan’s Nikkei climbed 0.7%, South Korea’s Kospi was up 0.5%. Hong Kong’s Hang Seng Index was up 0.2%, while China’s Shanghai was down 0.2%.

In currency markets, the euro was recently trading at $1.3024, slightly up from $1.3051 late Monday in New York. The common currency was trading at ¥104.16 from ¥104.29. The dollar was at ¥79.97, down 0.1%.

In other markets, June Nymex crude was down $0.29 at $97.65 while June Brent crude oil futures were up $0.29 at $113.49 a barrel. Spot gold was down $1.30 at $1637.80 an ounce. The June bund was 0.18 higher at 142.00.


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