Debt crisis: Double dip Eurozone recession likely
Published 07/11/2011 | 10:05
RECESSION in the Eurozone looks "ever more likely" in Q4 after sharp falls in Eurozone retail sales in September, Howard Archer at IHS Global Insight said today.
Sales were down 0.7pc month-on-month in September, and down 1.5pc year-on-year. Eurozone GDP growth is forecast at 0.2pc quarter on quarter in Q3 but contraction appears more likely than ever for Q4.
Consumer confidence is at a 26-month low in October, while Eurozone unemployment rose 188,000 in September to record highs.
Retail sales are down 3.7pc on last month in Portugal and 1.7pc in Spain. There's no data for Greece or Italy.
"This reinforces fears that the Eurozone is headed for contraction in the fourth quarter and recession is looming," says IHS.
Riskier stocks including banks and miners took a pounding today amid more fears that Italy will spark a deepening of the eurozone debt crisis.
With the country's borrowing costs now at a record high of more than 6.5pc, European markets are fearful that Italy will be forced to follow Greece, Ireland and Portugal in seeking a bail-out.
The FTSE 100 Index was 1.5pc or 83.5 points lower at 5442.8, while the Dax and CAC40 in Germany and France respectively were down nearly 2pc.
The latest turmoil took its toll on Lloyds Banking Group, which fell 1.2p to 27.4p, while Barclays was off 6.9p at 176.5p and miner Rio Tinto dipped 124.75p to 3361p.
Pumps and valves firm Weir was the biggest faller in the top flight, dropping 5pc or 126p to 1805p, despite forecasting full-year profits in line with market expectations.
On a brighter note, shares in Hovis and Mr Kipling maker Premier Foods enjoyed a much-needed rally after the FTSE 250 Index stock said its banks had agreed to defer an upcoming test of its loans.
Premier rallied 13pc or 0.4p to 3.8p, while Dixons Retail was 0.1p higher at 10.9p after rival Carphone Warehouse announced it would pull its Best Buy stores venture in the UK, resulting in the closure of 11 sites and the potential loss of over 1,000 jobs.