U.S. Jobs Report Compounds Europe's Woes
JUNE 4, 2010, 9:35 A.M. ET
online.wsj.com
By ISHAQ SIDDIQI And ANDREA TRYPHONIDES
LONDON—European stocks slumped as a disappointing U.S. jobs report added to worries about the health of the European economy.
The euro sank, with traders citing official comments on Hungary's woes and rumors of derivative problems at Société Générale.
"We won't comment on market rumors," a spokeswoman for France's third-largest bank said, adding, "if we had something to say, we would have said it."
Its stock was recently down 6.7%.
HSBC Bank caused jitters with a research note to clients in which it downgraded Europe excluding the U.K. to underweight from neutral. "There remains too much uncertainty about the health of banks, about the future arrangements for the euro, about sovereign debt and about growth for us to want to take risk in this region for the moment," said HSBC.
"We would not necessarily be as gloomy about the medium-term prospects as the consensus, but there are markets which offer less risk and better prospects for growth that we would prefer to be overweight at the moment," it added.
Other banking stocks fell, particularly those based in Spain, as worries about Spanish debt and the country's real-estate market heightened. Morgan Stanley cut its price targets for Banco Santander and Banco Bilbao Vizcaya Argentaria; shares in Santander were 4.5% lower, while BBVA was down 6%.
But BP was up 2.2% on its latest efforts to arrest the oil leak in the Gulf of Mexico.
The Stoxx Europe 600 index recently was down 1.4% at 245.36. London's FTSE 100 was down 1.6% at 5129.70, Frankfurt's DAX was down 1.9% at 5942.12, and Paris's CAC-40 was down 2.5% at 3469.69.
Dow Jones Industrial Average futures were down nearly 2% ahead of the opening bell, after the jobs report. While the U.S. Labor Department's Friday report showed the U.S. economy added jobs in May at the fastest pace in a decade, the gains were inflated by temporary government hiring for the 2010 Census and were not enough to bring unemployment down much.
The Hungarian prime minister's spokesman declined to comment on remarks by Lajos Kosa, managing vice president of Hungary's ruling Fidesz party, that Hungary is facing a Greece-like sovereign-debt crisis and will need crisis-management measures. But the spokesman, Peter Szijjarto, said the new government won't let the country's economy go the same way as Greece.
Earlier, Asian stock markets were mixed, with most indexes finishing off their lows. The session was marked by caution ahead of the crucial U.S. jobs data and as investors took some cash off the table after Thursday's region-wide gains.
Japan's Nikkei Stock Average fell 0.1% but South Korea's Kospi Composite gained 0.1%. The Shanghai Composite index was flat, as was Hong Kong's Hang Seng index. The Tokyo market was lower after rising briefly on news the Democratic Party of Japan has elected Naoto Kan its new party chief. As finance minister, Mr. Kan has advocated a weak yen to help exporters. |
