Sluggish economic growth weighs on Euro, stocks
Germany, France weighed on the European single currency and the region's stock markets
LONDON: (AFP) - Sluggish economic growth in eurozone heavyweights Germany and France weighed on the European single currency and the region s stock markets on Friday.
Nevertheless equities ended in positive territory, with London s benchmark FTSE 100 index rising 0.29 percent to end the day at 6,654.37 points. The Paris CAC 40 climbed 0.35 percent to 4,202.46 points, while in Frankfurt the DAX 30 added 0.05 percent to 9,252.94.
Milan jumped 0.97 percent and Madrid edged up 0.07 percent. "Shares in Europe fluctuated in and out of gains and losses on Friday continuing the sideways trading seen since the beginning of the week," said analyst Jasper Lawler at CMC Markets UK.
Official data showed France and Germany narrowly avoided a new recession in the third quarter, while the broader 18-nation eurozone also faces anaemic growth with just a 0.2 percent expansion.
Eurozone inflation came in at a low 0.4 percent as expected. "The moderate growth and inflation was cause for relief in European markets but narrowly avoiding recession is hardly a cause for exuberant buying," said Lawler.
Analyst Mike McCudden, at online broker Interactive Investor, said "the euro will no doubt remain under pressure as investors anticipate fresh stimulus intended to drag the region out of the mire.” The shared single currency spent most of the day down against the dollar, but by evening had recovered to $1.2483 from $1.2476 late in New York on Thursday. But without a fresh signal from the European Central Bank equities are unlikely to get an immediate strong push upwards.
Story of stagnation unchanged
"Any positive market impact will be limited and temporary," Daiwa Capital Markets economist Chris Scicluna told AFP.
"Despite modest upside surprises to today s GDP (gross domestic product) data, the story of broad stagnation in the euro area including Germany is unchanged." "Compared to economic conditions in the United States -- where monetary tightening is still likely by the end of the first half of 2015 -- the euro area economy is in a terrible state." Germany, Europe s biggest economy, grew by a slender 0.1 percent in the period from July to September, after shrinking by 0.1 percent in the preceding three months. And the French economy grew 0.3 percent in the third quarter, following a contraction of 0.1 percent in the second quarter.
The technical definition of a recession is two successive quarters of falling economic output. The broader eurozone economy grew by just 0.2 percent in the third quarter.
The euro remains weighed down from expectations that the European Central Bank could expand its asset purchasing program in 2015, dealers said. Across the Atlantic, Wall Street was flat in midday trading.
The Dow Jones Industrial Average slid 0.08 percent to 17,639.01 points after having eked out a new record Thursday. The broad-market S&P 500 slid 0.03 percent to 2,038.82, while the tech-rich Nasdaq Composite rose 0.02 percent to 4,681.06.
Asian markets were mixed Friday on profit-taking, although Tokyo pushed 0.56 higher as the dollar broke the 116 yen barrier. Sydney rose 0.21 percent while Seoul fell 0.78 percent.
In the final trading session before the launch of a cross-exchange connection, Shanghai ended 0.27 percent lower while Hong Kong gained 0.28 percent. Meanwhile, in company news on Friday, European aerospace giant Airbus said quarterly net profits nearly halved, as it ran into headwinds from adverse foreign exchange moves. Earnings after taxation sank 41 percent to 264 million euros ($329 million) in the third quarter from a year earlier, Airbus announced in a statement. However, Airbus shares rose 1.6 percent to 48.46 euros as investors cheered a big improvement in the group s cash flow.
In London foreign exchange deals, the British pound retreated to $1.5654, down from $1.5708 on Thursday. The euro climbed to 79.94 British pence from 79.43.
On the London Bullion Market, the price of gold rose to $1,169 an ounce from $1,161.75 late on Thursday.
