Reply #5: European Shares Drop as Debt Woes Weigh

[ozymandius]

LONDON—European stocks dropped Friday, with losses on Wall Street Thursday adding to downside pressure amid continuing concerns about the potential impact on euro-zone economic growth as governments in the region take measures to bring their swelling fiscal deficits under control.

The euro, meanwhile, fell to a fresh 14-month low under $1.2510 before steadying, and the cost of insuring Western European sovereign debt against default rose, as the enthusiasm generated by the announcement of a European Union support package for member states in difficulty, and the European Central Bank's decision to buy government bonds, started to fade.

The Stoxx Europe 600 Index declined 1.5% to 253.24. London's FTSE 100 was down 1.0% at 5373.21, Frankfurt's DAX was 0.9% lower at 6202.89, and Paris's CAC-40 was off 1.8% at 3661.52. The ASE in Athens was down 2.0% at 1682.18, the Lisbon PSI-20 slumped 2.4% to 7137.79 and the IBEX-35 in Madrid fell 3.3% to 9629.32.

Worries that Spain's and Portugal's austerity cuts and those that may be adopted by other European nations will have a negative impact on growth in the region has provoked the selling of stocks, said David Rees, a trader with Shortsandlongs.

Asian stock markets were mostly lower Friday, with Japanese exporters falling on the yen's recent strength, while shares in Thailand fell as clashes late Thursday between troops and anti-government protesters left several injured and one person dead. Japan's Nikkei 225 dropped 1.5%. Hong Kong's Hang Seng index fell 1.4% and the Shanghai Composite was off 0.5%. Thailand's SET index fell 1.2%.

http://online.wsj.com/article/SB10001424052748703460404575243573532763044.html?mod=WSJ_Markets_section_Stocks