European recession on horizon erodes optimism
YESTERDAY started on a positive note, with most European markets showing modest gains. But the optimism was quickly stamped out as it became clear that the prospects for the European Union -- and the single currency -- are distinctly muddy.
Economic optimism among business leaders and consumers in the eurozone plunged to a two-year low in December, according to the European Commission.
Factory orders in the EU's economic powerhouse -- Germany -- declined 4.8pc in November. That was the biggest decline in about three years.
The euro sank against the dollar, while the euro-area unemployment rate stood at 10.3pc in November -- a 13-year high. The region is poised to enter recession once again.
"Things are really starting to slow down," said Jennifer McKeown, senior European economist at Capital Economics in London. "We see the eurozone beginning to break up, perhaps as soon as this year."
Her comments came as Italian Prime Minister Mario Monti travelled first to Brussels and onwards to Paris, where he had discussions with French President Nicolas Sarkozy.
In the US, meanwhile, strong jobs data served to underscore the diverging fortunes on either side of the Atlantic.
In Ireland, the market followed the lead from mainland Europe. The ISEQ Overall Index was up slightly at the open but erased that gain later to end just marginally lower. It shed just under 0.1pc, or 2.65 points, to close at 2,889.87.
Among the main movers were mining firm Kenmare Resources. It gained 6.7pc, or 3.6 cent, to finish at 57.5 cent. Dairy group Glanbia added 3.5pc, or 16.5 cent, to €4.88, while food company Greencore advanced 2.7pc, or 1.7 cent, to 64 cent.
CRH lost 2.2pc yesterday, finishing down 33.5 cent at €14.74. That followed a 2.6pc drop on Thursday after Credit Suisse cut its rating on the stock.
National benchmark indices declined in 11 of the 14 western European markets that were open yesterday. Germany's DAX slipped 0.9pc and France's CAC 40 retreated 0.3pc. The UK's FTSE 100 rose 0.4pc.
Vodafone, the world's largest mobile-phone operator, climbed 1.3pc to 179.55p after Goldman Sachs upgraded the shares to "buy" from "neutral".
UK pub group Mitchells & Butlers, in which Irish investors John Magnier and JP McManus have about a 21pc stake, advanced 7.4pc to 246.7p. The operator of Harvester and Toby Carvery chains was upgraded to "overweight" from "equal weight" at Morgan Stanley.