By Carla Mozee, MarketWatch
Moody's cautions on 'Grexit'
European stocks fell Thursday and notched its first monthly loss
of 2015, as investors weighed a rise in the euro and concerns about
slowing global growth.
The Stoxx Europe 600 gave up 0.4% to close at 395.79, with the
lowest close since late March coming mainly as technology stocks
struggled. The pullback was the benchmark's third in a row, with
Wednesday's 2.2% selloff
(http://www.marketwatch.com/story/european-stocks-gain-as-corporate-results-roll-in-fed-in-focus-2015-04-29)
underpinned by U.S. data that showed meager growth in the world's
largest economy in the first quarter.
"Confidence certainly seems to have been shaken up, with a few
unknowns impacting investors," said IG Market Strategist Stan Shamu
in a note Thursday. There was "an unprecedented QE program by the
U.S. and, judging by the way data is going, the economy isn't quite
able to stand on its own two feet yet."
The Stoxx 600 closed April with a 0.4% decline, the first
monthly loss since December. Equities have been rallying to
all-time highs this year, fueled by funding resulting from the
European Central Bank's EUR1.1-trillion ($1.23 trillion)
bond-buying program, aimed at bolstering inflation levels and
encouraging economic growth.
The massive asset-purchase program has also driven government
bond yields throughout the region to record lows. Read: Why
investors are paying to lend European governments money
(http://www.marketwatch.com/story/heres-why-investors-are-paying-to-lend-european-governments-money-2015-04-29)
Data: Data released Thursday showed eurozone inflation was
stopped falling in April
(http://www.marketwatch.com/story/eurozone-consumer-prices-steady-after-declines-2015-04-30)
from negative 0.1% in March. But inflation still has a long way to
go to reach the ECB's target of around 2%. Read: It is too early to
cheer eurozone inflation
(http://www.marketwatch.com/story/why-its-too-early-to-cheer-eurozone-inflation-2015-04-30)
German jobless claims in April were down 8,000
(http://www.marketwatch.com/story/german-jobless-claims-fall-by-less-than-expected-2015-04-30)
from March, less than the decline of 13,000 forecast in a Wall
Street Journal poll of economists.
Euro: The shared currency (EURUSD) was trading at $1.1170, but
bounced above $1.12 during the session. The euro held to gains
against the U.S. dollar, as investors appeared to shrug off the
Federal Reserve's statement late Wednesday that suggested it is
keeping its options open on interest rates
(http://www.marketwatch.com/story/dollar-hits-3-week-low-against-euro-ahead-of-gdp-fed-statement-2015-04-29).
Many analysts, however, think the Fed will hold off on an
interest-rate hike at least until September.
The euro was up about 4% versus the greenback in April. On
Wednesday, it posted its best day against the dollar in six weeks,
a move that contributed to a 3.2% slide in Germany's DAX 30 . On
Thursday, the DAX rose 0.2% to 11,454.28, but closed April lower by
4.3%.
Corporates: Among stock movers, French steel-pipe maker
Vallourec SA dropped 9.3%. The sharpest decline since June 2014
came after the company late Wednesday swung to a first-quarter loss
of EUR76 million
(http://www.wsj.com/articles/vallourec-swings-to-loss-cuts-jobs-1430333521)($84.4
million), and revenue fell more than 17%, under pressure as demand
from energy companies softens. Standard & Poor's downgraded
Vallourec's credit rating late Wednesday.
Shares in Alcatel-Lucent tumbled 9.7% after a major shareholder
in the French telecoms company criticized the terms of its proposed
buyout by Nokia (NOK). Odey Asset Management, which holds more than
5% of Alcatel-Lucent, described the sale to Nokia as
"unacceptable," the Financial Times reported. Shares in Nokia
shaved off 10.7%.
Meanwhile, Nokia on Thursday said its network business
(http://www.marketwatch.com/story/nokia-profit-falls-but-beats-expectations-2015-04-30)
in the first quarter saw underlying operating profit fall to EUR85
million from EUR216 million, on higher revenue.
Greece: The Athex Composite swung higher, ending up 3.1% at
822.88 following reports that debt-saddled Greece is opening up to
larger concessions in talks with its creditors. Bond prices were
higher, pushing the yield on 2-year debt down 2.1 percentage points
to 19.1%. The yield on 10-year debt fell 75 basis points to
10.4%.
Moody's late Wednesday cut its rating on Greece's debt
(http://www.marketwatch.com/story/moodys-impact-of-grexit-on-euro-area-shouldnt-be-underestimated-2015-04-30)
deeper into junk territory, to 'Caa2'.
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