By Carla Mozee, MarketWatch
Euro finds support as German, Greek leaders talk
European stocks dropped Thursday, marking a second consecutive
daily loss, after economic data for the eurozone fell short of
expectations.
The Stoxx Europe 600 lost 0.4% to end at 407.18, with only the
oil and gas and telecom sectors edging higher. Among individual
shares, Ericsson AB sank 9.9% after the Swedish telecom-equipment
maker said higher operating costs contributed to
weaker-than-expected first-quarter profit
(http://www.marketwatch.com/story/ericsson-posts-weaker-than-forecast-profit-2015-04-23).
Germany's DAX 30 dropped 1.2% to 11,723.58, its biggest decline
in nearly a week. Losses deepened after preliminary figures from
data-firm Markit showed private-sector activity growth in
Germany--Europe's largest economy--softened slightly in April.
Markit's April flash manufacturing purchasing managers index for
Germany
(http://www.marketwatch.com/story/eurozone-economy-slows-in-april-pmis-show-2015-04-23)
hit a two-month low of 51.9, missing expectations for a 53.0
reading from analysts polled by FactSet. The flash
services-activity index reached a three-month low of 54.4, below a
projection of 55.3.
While the April data are consistent with further economic growth
at the start of the second quarter, "it will be interesting to see
whether weaker new-order growth and increased prices will result in
a further slowdown of output expansion, or whether the German
economy will regain momentum in coming months," said Markit
economist Oliver Kolodseike in his report.
Other Markit preliminary data showed growth slowed in France's
private sector in April. In Paris, the CAC 40 fell 0.6% to
5,178.91. Separately, Spain's unemployment rate edged up to 23.8%
in the first quarter, from 23.7% in the previous quarter. Spain's
IBEX 35 managed to turned higher, ending up 0.2% at 11,425.80.
On Thursday, European Central Bank board member Peter Praet said
the eurozone is on track to get back to economic growth
(http://www.marketwatch.com/story/ecbs-praet-eurozone-economy-back-on-growth-track-2015-04-23),
as the central bank's monetary policies begin to take hold. The ECB
last month launched a EUR1.1 trillion bond-buying program aimed at
boosting inflation and invigorating economic growth in the
eurozone.
Euro: The euro (EURUSD), meanwhile, was able to move higher
after the soft PMI reports, trading at $1.0806 versus $1.0726 late
Wednesday in New York.
Craig Erlam, senior market analyst at Oanda, said "quite a lot
of the move is technical," as the euro recovered ground after
falling back to Tuesday's low around $1.0660. The euro pushed into
the $1.08 after U.S. weekly jobless claims rose more than
expected.
Erlam said the euro also appeared to find support as Greek Prime
Minister Alexis Tsipras was due to meet with German Chancellor
Angela Merkel in Brussels on Thursday to discuss Greece's debt
troubles. "These talks may...be a sign that a deal is possible
because if these people are having a discussion, than clearly they
are trying to work toward a positive outcome," said Erlam.
Cash-strapped Greece and its creditors have so far been unable
to work out an agreement that would lead to Greece getting its next
tranche of bailout funds. Eurozone finance ministers will meet
Friday to discuss Greece, but hopes for a deal remain low.
Overall, the shared currency "remains in a downward trend," said
Erlam.
Greek stocks were higher Thursday, with the Athex Composite
Index closing up 2.4% at 736.60.
In London, the U.K.'s FTSE 100 turned higher by 0.4% to 7,053.67
(http://www.marketwatch.com/story/ftse-100-slips-with-miners-lower-after-soft-china-data-2015-04-23).
The heavily weighted mining sector fought off losses that had come
after HSBC's Chinese manufacturing activity survey fell to a
one-year low of 49.2 in April. China is a major buyer of metals and
other commodities.
Back on the DAX, Volkswagen was one of only six companies whose
shares moved higher. The stock rose 1.6% after Canada's
export-credit agency said it would lend Volkswagen EUR400 million
(http://www.marketwatch.com/story/volkswagen-to-get-financing-to-buy-auto-parts-2015-04-23)
($430 million) to buy Canadian-made parts for its plants in
Tennessee and Mexico.
Meanwhile, Deutsche Bank AG shares turned higher, rising 0.6%
after the German banking heavyweight agreed to pay a $2.5 billion
fine
(http://www.marketwatch.com/story/deutsche-bank-settles-libor-probe-with-25b-fine-2015-04-23)
to settle investigations by U.S. and U.K. regulators into
manipulation of interest rates.
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