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European stocks turn lower on E.Z. worries; DAX down 0.16%

Stock MarketsMay 10, 2012 07:25AM ET
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This article has already been saved in your Saved Items - European stock markets were turned lower in choppy trade on Thursday, as market sentiment waned after the European Central Bank cut its growth expectations for 2012 and as sustained concerns over Greece’s future in the euro zone dominated.

During European afternoon trade, the EURO STOXX 50 fell 0.32%, France’s CAC 40 dropped 1.03%, while Germany’s DAX 30 retreated 0.16%.

Market sentiment was hit after the EBC cut its 2012 gross domestic product growth outlook to minus 0.2% from minus 0.1%, in its monthly report published earlier, as downside risks remain to the economic outlook.

The report came after the leader of the leftist Syriza party, Alexis Tsipras, gave up attempts to form a new government on Wednesday, pushing the debt-stricken country closer to its second election in a few weeks and prompting European governments to withhold part of the latest tranche of rescue funds to be paid on Thursday.

Greek Socialist leader Evangelos Venizelos was to make a last attempt to form a government on Thursday, but chances seemed slim after both the conservatives and leftists tried and failed.

Despite concerns, financial stocks remained broadly higher, led by Spanish lenders BBVA and Banco Santander, up 2.40% and 2.33% respectively. Bankia, on the other hand, saw shares dive 7.69%, as Spain's government effectively took over the bank late on Wednesday after days of market anxiety over the lender's viability.

France’s Societe Generale also held gains, climbing 1.01%, while shares in Germany’s Deutsche Bank jumped 1.43%.

On the downside, Germany’s second-biggest utility, RWE AG, slid 2.88% after saying that first-quarter profit dropped 20% as Chancellor Angela Merkel’s decision to halt all of the country’s nuclear reactors curbed earnings.

Arkema also saw shares plummet 5.05% after the French maker of industrial chemicals posted first-quarter earnings before interest, taxes, depreciation and amortization of EUR253 million, failing to beat analysts’ estimates.

In London, FTSE 100 declined 0.51%, as markets eyed a monthly U.K. GDP estimate, while the Bank of England left its benchmark interest rate and asset purchase program unchanged.

Financial stocks were mixed as shares in the Royal Bank of Scotland plunged 2.69% and Barclays lost 2.16%, while HSBC Holdings and Lloyds Banking rose 0.36% and 1.91% respectively.

Earlier in the day, Lloyds Banking officially appointing quantity surveyor EC Harris as its single source professional services provider for the next three years.

Mining stocks were also mixed, with shares in Rio Tinto edging up 0.06% and Bhp Billiton dropping 0.59%, while copper producer Xstrata tumbled 1.98%.

At the company's annual general meeting in Brisbane earlier, Rio Tinto Chairman Jan Du Plessis said he is more confident about the global economic picture than he was six months ago, although the world continues to face considerable uncertainty and ongoing volatility.

In the U.S., equity markets pointed to a mixed open. The Dow Jones Industrial Average futures pointed to fall of 0.11%, S&P 500 futures signaled a 0.07% gain, while the Nasdaq 100 futures indicated a 0.14% decline.

Also Thursday, official data showed that French industrial production fell more-than-expected in March, declining 0.9% after a 0.9% rise the previous month. Analysts had expected industrial production to fall 0.4% in March.

Later in the day, the U.S. was to release official data on trade balance, followed by government reports on unemployment claims and import prices. Federal Reserve Chairman Ben Bernanke was also due to speak.

European stocks turn lower on E.Z. worries; DAX down 0.16%

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