European markets slide despite German vote
By PAN PYLAS (AP) – 39 minutes ago
LONDON — Europe's stock markets slid again Friday even though German lawmakers approved a massive eurozone rescue package — another sign that worries over the continent's debt crisis and the future of the euro currency itself have not gone away.
The FTSE 100 index of leading British shares was down 101.62 points, or 2 percent, at 4,971.51 while Germany's DAX tumbled 136.43 points, or 2.3 percent, to 5,731.45. The CAC-40 in France dropped 86.65 points, or 2.5 percent, to 3,345.87.
No respite is expected when Wall Street opens later — Dow futures were down 94 points, or 0.9 percent, at 9,962 while the broader Standard & Poor's 500 futures fell 10.8 points, or 1 percent, to 1,059.20.
The European debt crisis continues to be the main point of interest in the markets and fears are growing that it may prove to be the catalyst to a renewed downturn in global growth, if not an outright slide back into recession. While many of the world's leading stock markets are below the levels they started the year, oil prices have slid below $70 a barrel amid fears of waning global demand and U.S. Treasury yields remain at 2010 lows.
Worries about the debt crisis and the ensuing impact it may have on world growth have not been dampened by the news that Germany's lower house of parliament voted in favor of an EU-led rescue plan, sending it to the upper house, which represents Germany's 16 states and where Chancellor Angela Merkel's center-right government currently controls a majority, for a decision later in the day.
The euro750 billion (nearly $1 trillion) package was drawn up two weeks ago. Germany, Europe's biggest economy, is to contribute between euro123 billion and euro147.6 billion in loan guarantees. It comes hard on the heels of a separate package to rescue Greece — which was already unpopular with Germans.
Even though the upper house is also expected to approve the same measure later, the crisis hangs heavy over all investing decisions.
"A lack of policy direction throughout Europe is still weighing on sentiment, especially the threat of greater regulation over the banking industry," said Geoffrey Yu, an analyst at UBS.
Investors have been spooked by what some see as the failure by Europe's leaders to cooperate on economic issues — Germany's decision earlier this week to curb some trading activities was a unilateral measure that was not greeted positively elsewhere in the EU or in the markets.
"The market is becoming increasingly sensitive to signs that slower growth in Europe is spreading outside its borders," said Jane Foley, research director at Forex.com.
Figures Thursday provided hints that growth in the U.S. could be stalling — weekly jobless claims, for example, rose by an unexpectedly large 25,000 in a sign that the labor market remains weak.
In the currency markets, the euro remained relatively buoyant — by early afternoon London time the euro was up 0.7 percent on the day at $1.2543, way up on the four-year low of $1.2146 recorded Wednesday in the wake of the German ban.
Meanwhile, oil prices were back below $70 a barrel — benchmark crude for June delivery was down 93 cents at $69.87 a barrel in electronic trading on the New York Mercantile Exchange.
Earlier in Asia, Japan's Nikkei 225 stock average retreated 245.77 points, or 2.5 percent, to 9,784.54, while Australia's S&P/ASX 200 index shed 0.3 percent to 4,305.40. Indonesia's benchmark stock index plunged 3 percent but China's stock market in Shanghai bucked the trend, rising 1.1 percent.
Hong Kong and South Korean stock exchanges were closed for a public holiday. Trading in Thailand has been suspended due to political turmoil.
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