Europe midday: World Bank lowers growth forecasts

Date: Wednesday 13 Jun 2012

-France will press for banking union
-Greek deposit outflows may have risen to €700m per day
-Finnish Finance Minister prefers ESM for Spain rescue

FTSE-100: -0.13%
Dax-30: -0.52%
Cac-40: -0.34%
Stoxx 600: -0.41%
FTSE-Mibtel: -0.48%

The main European equity benchmarks are now registering slight falls. That ahead of important macroeconomic data expected out Stateside this afternoon and following generally as-expected debt auction results in Italy and Germany this morning.

Nonetheless, there continues to be a certain lingering feeling among some investors that countries like Germany and Finland continue to hold out longer than convenient for fiscal discipline and reforms. Precisely in this regard, some market commentary has called attention to remarks from the German finance Minister, Wolfgang Schaeuble, in daily La Stampa, to the effect that Italy must continue ahead with its reform drive.

Germany sold €4.04bn euros of 10-year bunds at an average yield of 1.52%, up from a rate of 1.47% the last time around. Italy’s borrowing costs surged at the sale of €6.5bn of 1 year Treasury bills. The bills were sold at a rate of 3.97% versus the 2.34% seen at the last sale.

Acting as a backdrop, the World Bank has lowered its forecast for economic growth to 2.5% in 2012, from the 6.1% expansion last year and 7.4% growth in 2010. That as the Eurozone crisis weighs on activity levels.

From a sector stand-point the best performers now on the DJ Stoxx 600 are: basic resources (-1.32%), industrial goods (-2.22%) and automobiles (-2.81%).

Better than expected economic numbers

Eurozone industrial production contracted at an 0.8% month-on-month pace in April (Consensus: -1.2%).

Spanish consumer prices fell 0.1% month-on-month in May (Consensus: -0.2%).

Slight gains in other asset classes

The euro/dollar is now rising by 0.29% to the 1.2542 dollar mark.

Front month Brent crude futures are gaining 0.573 dollars to the $97.7/barrel level in ICE trading.

AB

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