Slow Eurozone Growth Reason Behind Slump For Stocks

December 5th, 2011 by James

Slow Eurozone Growth Reason Behind Slump For StocksOn Tuesday, investors fled global stocks as poor growth figures reinforced how difficult it would be for European countries to reduce their debt piles and balance their budgets.

Economists said the eurozone could slip back into recession in coming months after seventeen countries using euro eked out just 0.2 percent growth in the third quarter.

From in.news.yahoo.com:

While Tuesday’s growth figures did not include estimates for Greece and Italy, they clearly increased investors’ concerns about those countries. Both desperately need growth to pull out their crises.

The bad news pushed European shares and the euro down for the second day. In France, the CAC-40 fell 1.8 percent to 3,054, while Germany’s DAX retreated the same amount to 5,875. The FTSE index of leading British shares was down 1.0 percent at 5,465.33.

Borrowing rates rose worryingly, with Italy’s benchmark 10-year rate back over 7 percent and Spain’s up to 6.22 percent. Even the yield of France — considered one of Europe’s core growth engines — was edging up, touching 3.60 percent.

“This is an extremely worrying time for Europe as contagion is starting to become a very real possibility,” said Simon Furlong, a trader with Spreadex. “The stark reality (is) that there could very possibly be a Domino effect in Europe.”

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