Friday, 28 November 2008

European economy looks bad but stocks gain

The European economy is likely to continue deteriorating. Bloomberg reports:

European confidence in the economic outlook fell to a 15-year low this month even after radical interest-rate cuts and government stimulus measures aimed at battling the impact of the financial crisis.

An index of executive and consumer sentiment dropped to 74.9 from 80 in October, the European Commission in Brussels said today. The November decline was bigger than economists had forecast and takes the index to the lowest since August 1993. Separate figures showed European retail sales fell the most in at least five years in November.

For the UK, Reuters reports:

House prices fell 0.4 percent this month as the credit crisis continued to hit the housing market, but the annual rate of decline eased slightly from October's record drop, a survey showed on Thursday.

If that suggests possibly some deceleration, perhaps there is some corroboration from this Bloomberg report on consumer confidence:

U.K. consumer confidence stayed close to the lowest level in more than three decades in November as gloom about the recession deterred spending, GfK NOP said.

An index of sentiment, based on a survey of 2,000 people between Nov. 7 and Nov. 16, rose one point from the previous month to minus 35. A gauge measuring the general economic situation in the past year rose one point to minus 71, still 39 points lower than in the same month last year.

It's probably still too early to call a bottom in the economy. Nevertheless, European stock markets did finish in positive territory on Thursday. Bloomberg reports:

European stocks climbed, sending the Dow Jones Stoxx 600 Index to its fourth straight gain, as investors speculated government efforts to shore up banks and the economy will support profits...

The Stoxx 600 added 2.4 percent to 203.62, extending this week’s gain to 12 percent. The index is still down 44 percent in 2008, headed for its worst year since records began in 1987, as economies from Germany and the U.K. to the U.S. slip into recession.

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