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European stocks tumble on IMF, Greece woes; DAX drops 1.1%

Published 05/16/2011, 05:17 AM
Updated 05/16/2011, 05:17 AM
Investing.com – European stock markets posted sharp losses on Monday, as the arrest of International Monetary Fund chief Dominique Strauss-Kahn for sexual assault over the weekend added to uncertainty surrounding a bailout for Greece, while U.S. futures indexes pointed to a broadly lower open on Wall Street.

During European morning trade, the EURO STOXX 50 sank 1%, France’s CAC 40 tumbled 1.3%, while Germany's DAX 30 dropped 1.1%.

Euro zone finance ministers were to meet later in the day to discuss further support for Greece, which is struggling to meet the terms of a EUR110 billion European Union/IMF bailout last year.

Also on the agenda is the approval of EUR78 billion in aid for Portugal and the nomination of Bank of Italy Governor Mario Draghi to be the next president of the European Central Bank.

Shares in the financial sector were broadly lower, with German lender Deutsche Bank tumbling 2.7%, Italian banking giant Unicredit dropping 2.35%, while shares in Europe’s largest financial group BNP Paribas slumped 2.5%.

Losses among automakers also contributed to downward pressure. Europe’s largest automaker Volkswagen saw shares fall 2.6%, Daimler slipped 1.3%, while French automaker Renault dropped 2.45%.

Earlier in the day, official data showed that consumer price inflation in the euro zone rose by 2.8% in April, broadly in line with expectations. 

In London, the commodity-heavy FTSE 100 was down 0.75% as gold producer African Barrick Gold sank 3.2% to hit an all-time low after the company said a malfunction at its Buzwagi mine in Tanzania will result in the mine running at reduced capacity for the next two weeks.

On the upside, software developer Autonomy saw shares jump 5.1% after said it planned to acquire selected assets of U.S. rival Iron Mountain for approximately USD380 million.

The company said the deal will add between USD130 million and USD140 million to its revenue and result in cost savings of around USD40 million a year.

The outlook for U.S. equity markets, meanwhile, was downbeat ahead of earnings reports from the largest U.S. home improvement retailer Lowes and department store retailer JC Penny.  

The Dow Jones Industrial Average futures pointed to drop of 0.2%, S&P 500 futures indicated a decline of 0.3%, while the Nasdaq 100 futures shed 0.15%. 

Later in the day, the U.S. was to publish official data on manufacturing activity in New York state. In addition, Federal Reserve Chairman Ben Bernanke was to speak.

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