European stocks drop at open
Market watch top headlines
LONDON, Dec 28 AFP
December 28 2012, 11:02PM
European stock markets have dropped and the euro has fallen versus the dollar on the final trading day of the year for the Frankfurt index, which soared in 2012 despite eurozone and US economic strains.
Equities were downbeat in the absence of a deal to avert the US "fiscal cliff" of sharp tax hikes and spending cuts, analysts said, after staging a sustained rally in late 2012 on eurozone debt progress and fresh stimulus moves by the US Federal Reserve.
In late morning trade on Friday, London's FTSE 100 index of top companies was down 0.01 per cent at 5,953.59 points and Frankfurt's DAX 30 fell 0.29 per cent to 7,633.45 points. In Paris, the CAC 40 slid 0.62 per cent to 3,651.61 points, after earlier reaching its highest level for the year.
French national statistics agency INSEE on Friday revised its figure for the country's third quarter economic growth down from 0.2 per cent to 0.1 per cent, making the government's full-year target harder to reach.
While the Frankfurt market was trading for the last time in 2012 on Friday, London and Paris will stage half-sessions on Monday, the final day of the year.
In foreign exchange deals on Friday, the euro fell to $US1.3186 from $US1.3235 late in New York on Thursday. Gold prices rose to $US1,661.10 an ounce on the London Bullion Market from $US1,655.50 late on Thursday.
"The fiscal cliff remains at the centre of global focus as the ongoing crisis continues to provide direction for much of the major indices," said analysts at trading company Alpari.
US politicians have until Tuesday to come up with a deficit-cutting budget that is less painful than the steep tax hikes and swingeing spending cuts that most economists say will tip the country into recession in 2013.
Dealers seemed to take heart from reports that the House of Representatives would reconvene on Sunday, raising hopes of an 11th-hour compromise.
"Unable to reach an agreement ... US lawmakers will attempt to meet again in a final attempt to ink out a deal to avert the crisis but markets are not holding their breath," said Ishaq Siddiqi, market strategist at ETX Capital trading group.
"With low volumes (in stock market trade) due to the seasonal break, activity is likely to be subdued for the course of the session and traders are again unwinding positions before fingers are burnt."
Despite Friday's losses, Europe's main stock markets have made some impressive gains in 2012, with Frankfurt's DAX 30 surging by almost 30 per cent in value.
Across in Asia, Tokyo's main index on Friday closed at their highest point since last year's quake-tsunami, ending 2012 up almost 23 per cent on-year as Japan's new government pledges to turn around the long-suffering economy.
Elsewhere on Friday, Italian borrowing rates rose slightly in a five- to 10-year debt auction, as the government raised close to 6.0 billion euros ($A7.72 billion) in its last bond sale of 2012.
The Treasury raised 2.87 billion euros in five-year bonds, at a rate of 3.26 per cent compared with 3.23 per cent at the last comparable operation in November, and 3.0 billion euros in 10-year bonds at 4.48 per cent, up from 4.45 per cent, the Bank of Italy said.