Euro, stocks hit by sluggish eurozone growth

GMT 14:34 2014 Friday ,14 November

Arab Today, arab today Euro, stocks hit by sluggish eurozone growth

Euro, stocks
London - AFP

Sluggish economic growth in eurozone heavyweights Germany and France weighed on the European single currency and the region's stock markets on Friday.
Official data showed France and Germany only narrowly avoided a new recession in the third quarter, while the broader 18-nation eurozone also faced anaemic growth.
"There is a clear message that much work still needs to be done to stimulate the flagging eurozone economy," said analyst Mike McCudden at online broker Interactive Investor.
"The euro will no doubt remain under pressure as investors anticipate fresh stimulus intended to drag the region out of the mire."
In late morning deals, the shared single currency dipped to $1.2463 from $1.2476 late in New York on Thursday.
Frankfurt's DAX 30 index of top companies edged up 0.04 percent to 9,252 points and the CAC 40 in Paris gained 0.22 percent to 4,196.98.
London's benchmark FTSE 100 index meanwhile fell 0.07 percent to 6,630.51 points compared with Thursday's close.
- Equity gains 'limited' -
"Any positive market impact will be limited and temporary," Daiwa Capital Markets economist Chris Scicluna told AFP.
"Despite modest upside surprises to today’s GDP (gross domestic product) data, the story of broad stagnation in the euro area including Germany is unchanged."
"Compared to economic conditions in the United States -- where monetary tightening is still likely by the end of the first half of 2015 -- the euro area economy is in a terrible state."
Germany, Europe's biggest economy, grew by a slender 0.1 percent in the period from July to September, after shrinking by 0.1 percent in the preceding three months.
And the French economy grew 0.3 percent in the third quarter, following a contraction of 0.1 percent in the second quarter.
The technical definition of a recession is two successive quarters of falling economic output.
The broader eurozone economy grew by just 0.2 percent in the third quarter.
The euro remains weighed down from expectations that the European Central Bank could expand its asset purchasing programme in 2015, dealers said.
- Clutching at straws -
"We’re clutching at straws here on the GDP data," said Societe Generale analyst Kenneth Broux, who highlighted that French business investment has now dropped for the last four quarters.
"It won’t change bearish sentiment vis-a-vis euro/dollar, given budding speculation of a widening of asset purchases by the ECB next year," he told AFP.
Meanwhile, in company news on Friday, European aerospace giant Airbus said quarterly net profits nearly halved, as it ran into headwinds from adverse foreign exchange moves.
Earnings after taxation sank 41 percent to 264 million euros ($329 million) in the third quarter from a year earlier, Airbus announced in a statement.
However, Airbus shares jumped 2.60 percent to 48.94 euros as investors cheered a big improvement in the group's cash flow.
In London foreign exchange deals, the British pound retreated to $1.5670, down from $1.5708 on Thursday. The euro rose to 79.54 British pence from 79.43.
On the London Bullion Market, the price of gold dipped to $1,153.71 an ounce from $1,161.75 late on Thursday.


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