European Stocks Fall, Spanish Markets Battered Again
07/06/2012| 01:33pm US/Eastern
By Barbara Kollmeyer
MADRID--European stock markets ended lower Friday as disappointing U.S. jobs data added to worries about global growth and Spanish stocks groaned under the strain of bond yields that almost hit 7%.
The Stoxx Europe 600 index fell 1% to 254.41, its third straight loss, although it notched a gain of 1.3% for the week. U.S. markets were solidly in the red as European markets closed.
Banks and car stocks fell as those sectors took another ding after a disappointing U.S. jobs report confirmed market worries about the global growth picture. Spanish lender BBVA slid 5.1%, making it one of worst-performing financial stocks.
Hardest hit among Europe's bourses was Spain's IBEX 35 index, which tumbled 3.1% to 6738.90, after dropping 3% Thursday. The battered market has plunged 21% so far this year.
Along with sharp losses for BBVA, Banco Santander skidded 3.9% as investors remain worried about the health of the country's banking sector.
As stock prices fell, so did those for bonds, pushing the yield on the country's 10-year government bond to nearly 7%, a level that analysts consider unsustainable over the longer term. The 10-year yield rose 0.18 percentage point to 6.98%, leaving it around levels not seen since before the European Union summit a week ago.
Spain reported industrial production sank 6.1% in May from a year earlier. While the decline wasn't as steep as feared, production has now shrunk for nine consecutive months.
Ioan Smith, director at Knight Capital Europe, said with yields on Spain's bonds soaring, it is clear the "half-life" of decisions reached during the June 28-29 European Union summit had been less than a week.
"Yesterday, the ECB continued to put the onus on governments to solve their debt crisis" and "did not even discuss 'nonstandard' measures such as buying Spanish and Italian bonds to lower borrowing costs," creating "another overhang," he said in emailed comments.
Interest-rate cuts from China and the European Central Bank and easing measures from the Bank of England, all announced Thursday, also failed to appease investors as ECB President Mario Draghi spoke of lower growth prospects.
Underscoring the dismal growth picture, Peugeot dived 7.7%. France's biggest car maker said global sales plunged in the first half of the year because of recessions in key European markets.
The CAC 40 index dropped 1.9% to 3168.79. Tire maker Michelin dropped 2.5%. German car makers Daimler and BMW slid 3.3% and 4.6%, respectively.
But banks were also falling fast, with Societe Generale sliding 5.7% and Credit Agricole declining 4.6%, both in Paris. In Frankfurt, Commerzbank dropped 3.5% and Deutsche Bank fell 4.7%. Barclays lost 2.1% in London.
Among other national benchmarks, the DAX 30 index fell 1.9% to 6410.11 and the FTSE 100 index fell 0.5% to 5662.63.
U.K. retailers were lower across the board. Marks & Spencer Group lost 3.4% ahead of a business update next week. Resource stocks also declined; heavyweight miner Rio Tinto slid 2.8%.
Shares of Aviva rose 1.2%. The insurer successfully sold shares in Dutch firm Delta Lloyd, which fell 4.4%.