GERMANY/SPAIN: German stocks decline for fifth day while Spanish markets open with soaring premium risk

Record ID: 1538050

  • Title: GERMANY/SPAIN: German stocks decline for fifth day while Spanish markets open with soaring premium risk
  • Date: 4th August 2011
  • Summary: NEWSPAPERS ON DISPLAY FRONT PAGE OF SPANISH DAILY 'EL MUNDO' WITH HEADLINE READING: "SPAIN AND ITALY ON THE EDGE OF FINANCIAL STRANGULATION." 'EL MUNDO' HEADLINE READING: "SPECULATORS HAVE DOUBTS ON THE UNITED STATES BUT ATTACK THE EURO" FRONT PAGE OF SPANISH DAILY 'EL PAIS' WITH HEADLINE READING: "THE DEBT CRISIS HARASSES SPAIN" FRONT PAGE OF SPANISH DAILY 'ABC' WITH HEADLINE READING: "ZAPATERO TELLS THE OPPOSITION THAT DEBT CRISIS IS VERY DELICATE"
  • Embargoed: 19th August 2011 02:08
  • Keywords:
  • Location: Spain, Germany
  • City:
  • Country: Germany Spain
  • Topics: Finance,Politics
  • Reuters ID: LVABHN2XT7LDF26IXVJWPNG9RGSO
  • Aspect Ratio: 4:3
  • Story Text: German stocks fell for a fifth day on Wednesday (August 3), with the benchmark DAX Index extending a four-month low, amid concern a slowdown in the U.S. economy is damping global growth.
    Metro AG, Germany's biggest retailer, plunged to the lowest price in two years after saying operating profit dropped as its Media-Saturn consumer-electronics unit posted the first loss in at least 20 years. Wacker Chemie AG sank 10 percent after reporting earnings that missed analysts' estimates.
    The DAX lost 2.3 percent to 6,796.75 at the 5:30 p.m. close in Frankfurt on Tuesday (August 2) and fell to its lowest level since March as a report showed U.S. manufacturing expanded in July at the slowest pace in two years. The DAX has sunk 9.7 percent from this year's high on May 2 as investors speculated that Europe's sovereign-debt crisis would derail the economic recovery.
    Congressional leaders voiced confidence the Senate will vote to ratify a U.S. debt-limit compromise that will avert a default even as it defers decisions on the nation's finances to a bipartisan panel. But it was more a political than a financial decision, according to Fidel Helmer, expert for the equity market at Hauck & Aufhaeuser. "It was a political decision and a political duel between republicans and democrats," he said. "The raising of the debt limit is one thing but the other thing is that the U.S. will still be in debt and that will not solve the of the U.S. debt at all. And the rating agencies don't like that, the U.S. is still AAA but the prospect is negative. And that stresses the markets."
    Both Standard & Poor's and Moody's Investors Service are weighing whether to cut the U.S.'s credit rating. S&P said last month that the political impasse has boosted to 50 percent the chance that it will downgrade the country's debt from AAA within three months.
    But the markets with concentrate now again on Europe, as Helmer said. "We have enough of our own problems beginning with Greece, Ireland, Portugal, Spain, Italy - where we will see a statement of Berlusconi today - and as I said, we have enough problems of our own here in Europe and the stress the markets."
    Spain's premium risk on the country's debt soared for the second day in a row on Wednesday reaching an euro lifetime high of over 407 basis points as Madrid's trading market opened at 0900 local (0700GMT).
    On Tuesday (August 2) the market's nervousness made Spanish Prime Minister Jose Luis Rodriguez Zapatero postpone his holidays as the premium risk rose to over 400 basis points.
    The Spanish and Italian debt crisis were on all front pages.
    "Spain and italy on the edge of financial strangulation," said conservative-leaning "El Mundo" as government-leaning "El Pais" said: "The debt crisis harasses spain."
    Morning commuters expressed concerns about the crisis:
    "There are too many very well-prepared people here without jobs, markets are bad, prices rise every day, we are mortgaged up to the hilt, collapsed and without future," said Madrid resident Olga as Federico, a retired Madrilian blamed the crisis on Spain's and Italy's governments.
    "It is very difficult and there are ulterior motives against the euro, there are ulterior motives against certain useless governments such as Italy's or Spain's which are affecting the European Union," he told Reuters.
    Spanish debt has been in the firing line in financial markets on the heels of a review for a possible downgrade from creditrating agency Moody's, which cited weak growth and out of control regional spending as key challenges for the euro zone's fourth largest economy.
    Unpopular Zapatero has been considered a weak leader since he decided not to run again earlier this year, and the Socialists badly lost a May regional election.
    Spain's high unemployment fell in July for the fourth month running as summer tourism gave a boost to the economy, official data showed on Tuesday.
    Socialists are hoping the improved data will erode the lead in opinion polls of the opposition Popular Party by the time elections are held.
    The registered jobless rate fell by 1.02 percent in July from a month earlier, or 42,059 people, but still leaving 4.08 million out of work, the Labour Ministry said on Tuesday.
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