European stock markets yesterday were dragged down by the plunge in US markets. Bloomberg reports:
European stocks fell to a four-week low after disappointing earnings from the largest U.S. mortgage lender pushed financial shares lower and the U.K.'s worst floods in 60 years weighed on retailers...
Europe's Dow Jones Stoxx 600 Index lost 1.5 percent to 388.94, as all 18 industry groups retreated. The index has declined 2.8 percent from a 6 1/2-year high reached June 1 on concern losses in the U.S. mortgage market will erode earnings for financial companies.
Economic data from Europe yesterday were mixed.
Eurostat reports that industrial new orders increased by 1.7 percent in May in the euro area and by 3.2 percent in the EU27, rebounding from falls in April.
However, data for more recent periods indicate that the European economies may be slowing. From Bloomberg:
Growth in Europe's manufacturing and service industries, which account for two thirds of the economy, slowed more than economists forecast in July as the euro rose to a record and oil prices increased.
Royal Bank of Scotland Group Plc said its combined index, spanning industries from autos to banking and airlines in the 13- nation euro region, fell to 57.3 from 57.8 in June...
Royal Bank of Scotland's manufacturing index fell to 54.8 from 55.6 in June while its gauge of services growth declined to 58.1 from 58.3. Today's report is an initial estimate of the indexes...
New manufacturing orders fell to their lowest since November 2005, while in the services sector orders reached the highest level since June last year, today's report showed...
French consumer spending on manufactured goods jumped 1.6 percent in June from May, more than twice as much as expected, as unemployment fell in Europe's third largest economy, Insee, the Paris-based national statistics office, said today...
Italian consumer confidence remained near a 14-month low in July as households fretted about higher gasoline prices, while German import prices increased more than economists predicted in June, led by higher oil costs, reports today showed.
There was also weakness in manufacturing in the UK, where the Confederation of British Industry said yesterday that its monthly manufacturing order books balance fell to -6 in July from +8 in June.
The silver lining here is that slower economic growth would discourage further interest rate hikes from the ECB and BoE and thus help support markets in general.
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