Forexpros – European shares closed lower Thursday, for the second straight session, as weaker than expected U.S. economic data combined with continued euro zone debt fears to continue the risk off atmosphere.
At the close of European trade, the EURO STOXX 50 gave back 1.85%, France’s CAC 40 fell 2.05%, while Germany’s DAX dropped 0.90%. Meanwhile, in the U.K. the FTSE 100 slipped 0.01%.
Sparking the risk off trade, government data indicated that manufacturing activity in the Philadelphia-region expanded at a slower rate than expected in April, while an industry report showed that U.S. existing home sales declined unexpectedly last month.
The data arrived after a government report showing that the number of people who filed for unemployment assistance in the U.S. last week fell less-than-expected, while the previous week’s figure was revised higher.
The Department of Labor reported the number of individuals filing for initial jobless benefits in the week ending April 14 fell by 2,000 to a seasonally adjusted 386,000, disappointing expectations for a decline of 18,000 to 370,000.
The previous week’s figure was revised up to 388,000 from 380,000
The equity bearish sentiment continued despite the Spanish bond auction success. Spain earned slightly more than the full targeted amount of EUR2.5 billion, while the yield on the country’s 10-year bonds was higher but remained below the 6% level.
Spain auctioned EUR1.11 billion of two-year bonds at an average yield of 3.46%, up from 2.06% at a similar auction last month and EUR1.42 billion of 10-year bonds at an average yield of 5.74%, up from 5.33% from a similar auction in March.
The increase in 10-year bond yields reflected concerns that that Spain’s government may struggle to reduce one of the largest deficits in the euro zone in the face of a looming recession.
In other news, China may slash the reserve ratio for lenders according to Xinhua News helping ease growth concerns.
Meanwhile, the International Monetary Fund stated that it has received pledges for approximately USD320 billion to increase its lending resources as a backstop for the debt crisis.
Cable & Wireless plunged 8.2% as Tata Communications dropped out of bidding for the U.K. network operator.
Ladbrokes, the U.K. betting group, climbed 6.5% after predicting a 2012 digital offering profit.
Ball bearing maker, SKF, climbed 4.9% after announcing a sales increase in the first quarter
U.S. stocks are following mixed with the Dow down 0.18%, the S&P 500 trading higher 0.10% and the Nasdaq giving back 0.06%.
Investors are awaiting German business climate numbers, U.K. retail sales and Canadian CPI on Friday.
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