While you were sleeping: Euro woes weigh

While you were sleeping: Euro woes weigh

March 22 (BusinessDesk) – Stocks on both sides of the Atlantic fell as worse-than-expected euro zone manufacturing data bolstered concern its economic recovery might take longer than feared.

The Markit Eurozone PMI Composite Output Index dropped to 46.5 in March, from 47.9 in February, according to the flash estimate. Flash Germany Manufacturing PMI dropped to 48.9 in March, a three-month low and down from 50.3 in February.

“The flash PMI data suggest that the euro-zone business environment deteriorated at a quickening rate in March," Chris Williamson, chief economist at Markit, said in a statement. "The concern is that the downturn has gathered pace again."

Meanwhile, the European Central Bank told Cyprus it has until Monday to come up with a plan to raise its 5.8-billion-euro share of a 10-billion-euro bailout plan; failure means the end of the ECB's emergency lifeline for the country's bleeding banks.

"Europe is in desperate need for growth, but today’s bad PMI numbers are signalling a worsening of growth prospects,” Witold Bahrke, who helps oversee US$55 billion as senior strategist at PFA Pension in Copenhagen, told Bloomberg News. “This, combined with increasing political risk, is normally a recipe for renewed euro stress.”

Also weighing on Wall Street were earnings that fell short of expectations. Shares of Oracle tanked, last down 8.8 percent, after the company reported sales and profit that disappointed analysts and investors after yesterday's market close.

In afternoon trading in New York, the Dow Jones Industrial Average fell 0.54 percent, while the Standard & Poor's 500 Index slid 0.42 percent, and the Nasdaq Composite Index dropped 0.77 percent.

Europe's Stoxx 600 Index ended the day with a 0.7 percent decline from the previous close.

Benchmark indexes in the UK, Germany and France also weakened, shedding 0.7 percent, 0.9 percent and 1.4 percent respectively.

While optimistic, the latest data on US housing and jobs failed to change the mood.

Existing home sales climbed 0.8 percent to an annual rate of 4.98 million units in February, the highest level since November 2009, according to the National Association of Realtors.

"With buying conditions remaining very supportive to demand and overall economic fundamentals continuing to improve, we expect the momentum in housing activity to improve further, providing a supportive backdrop for the recovery more generally," Millan Mulraine, a senior economist at TD Securities in New York, told Reuters.

A separate report showed that US house prices climbed 6.5 percent in the year through January, the largest increase since 2006, according to the Federal Housing Finance Agency.

(BusinessDesk)

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