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European stocks drop as fiscal cliff talks at standstill

Publish Date28/12/2012 12:19:49 PM

Last Update28/12/2012 12:30:07 PM

European stocks drop as fiscal cliff talks at standstill

European stocks are trading lower midsession Friday amid lingering worries over the fiscal cliff despite a successful Italian bond sale.

Italy successfully accessed the market for the first medium and long term bond auction for 2013 financing selling 5.9 billion euros of five and ten year’s bonds.

The Italian Treasury sold on Friday 3 billion Euros of 10-year debt at 4.48 percent marginally changed from 4.45 percent at November auction. The bid-to-cover ratio was stronger at 1.47 from 1.18 in last auction a month ago.

Italy also sold 2.9 billion euros of five years bonds at an average yield of 3.26 percent slightly higher compared with 3.23 percent in November 29 auction and the bid-to-cover ratio was also stronger at 1.29 compared with 1.24 in November.

On the other end, France final GDP reading for the third quarter was revised unexpectedly lower to 0.1% from 0.2 percent. On the year the expansion was also revised to 0.0 percent from 0.2 percent, unchanged from the second-quarter as the second largest euro economy stalls amid the debt crisis challenges and global economic slowdown. 

As of 6:46 EST, the benchmark index for Europe, STOXX 600 fell 0.41% or 1.19 points to 279.41, while STOXX 50 dropped 1.0% or 9.73 points reaching 2633.44.

The STOXX 600 worst performing sectors were led by Utilities, followed by Financials and industrial sector respectively.

The markets are still weighed lower by the lingering uncertainty in Washington. Policy markers cut short their Christmas vacation to attend to meetings with president Obama in the final bids to reach a deal to avert the fiscal cliff.

More meetings are scheduled for later in the day on Friday while the Senates called for a session on Sunday to deal with the looming fiscal disaster and inevitable recession.

Fears that the United States will fail to skirt the cliff is weighing on the market in the final days of trading for the year as investors prepare for yet another long weekend and likely low trading volumes next Monday in the final session of the hectic 2012!

British index FTSE 100 also fell today by 18.79 points or 0.32% to 5935.55 points, after opening at 5954.30, while it reached a low of 5931.65 and a high of 5975.97.

The French CAC40 index dropped 0.97% or 35.77 points to 3638.49 points, after opening at 3677.52, reaching a high of 3680.11 and a low of 3635.68.  

German DAX lost 43.70 point or 0.56% to 7612, after opening at 7649.89 recording a high of 7665.68 and a low of 7602.89.

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