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Euro zone growth scare

Thursday, August 14 08:32:53

European stocks opened lower on Thursday as disappointing economic output data from the euro zone's two largest economies dashed hopes for a more solid recovery in the currency bloc.

By 0712 GMT, the pan-European FTSEurofirst 300 index was 0.3 percent lower at 1,322.09 points, Germany's DAX also fell 0.3 percent and France's CAC dropped 0.5 percent.

The German economy suffered a surprise contraction, its first in more than a year, in the three months to June and France slashed its growth forecasts for this year and the next after its economy failed to grow in the second quarter.

A flash estimate of second-quarter euro zone economic growth is due at 0900 GMT. Economists had expected euro zone GDP to have expanded by 0.2 percent on the quarter in the three months to June, the same pace as seen in the first quarter.

While the weak data clouded the macro economic picture in the euro zone, it was also seen shortening the odds of a move by the European Central Bank to shore up the economy via an asset-purchase programme, which would drive up share prices.

Some strong German corporate results also provided some support to the market.

TUI AG rallied 3.4 percent after it said it is very confident its full-year results will reach the upper end of its target forecast after third quarter profits almost doubled.

German potash miner K+S surged 2.3 percent after recording higher-than-expected earnings before interest and tax in the second quarter.

Shares in steelmaker ThyssenKrupp added 0.8 percent as the German group said it may return to a net profit this year, raising its outlook for a second time after restructuring at its steel mill in Brazil paid off and demand for elevators and chemicals plants bolstered earnings. (Reuters)

For more visit: www.businessworld.ie