Debt Crisis: European markets open down as inflation soars
European markets opened on the backfoot today on data that showed European inflation soared in September while manufacturing figures from Asian powerhouse China fuelled fears of a global recession.
London’s FTSE 100 was off 1.5pc while France’s CAC fell 1.4pc.
Germany’s DAX dropped even further and fell 2.5pc.
European inflation now stands at 3pc, its biggest increase in three years, putting pressure on already stressed European economies hurt by austerity measures and falling investor confidence.
The unexpected increase from 2.5pc puts pressure on cash-strapped consumers but also makes it more difficult for the ECB to drop interest rates.
The ECB’s focus is keeping inflation as close to 2pc as possible.
European confidence also slumped in September but on a more positive note the jobless figure held steady at 10pc, according to another report.
Meanwhile, a monthly survey by banking giant HSBC showed China's manufacturing remained stagnant in September due to sluggish demand both at home and abroad.
The weak start followed a poor session in Asia where Hong Kong's Hang Seng was more than 2pc down and the Nikkei in Japan was flat.
Meanwhile, investors in Europe remain cautious as Greek Prime Minister George Papandreou holds further talks with European leaders over the next instalment of his country's EU bailout.
Mr Papandreou will meet French President Nicolas Sarkozy as debt inspectors decide whether Greece is making enough progress with its austerity measures to receive the €8b loan.
Earlier markets had a mixed reaction from Germany’s backing to increase the value of the €440bn European bailout fund.
The euro increased in value initially but then lost ground.