RTTNews - The European markets fell for the first time in six days on Thursday after the U.S. Federal Reserve trimmed its growth forecast for the world's largest economy and Standard & Poor's cut Britain's credit outlook.
In fresh quarterly forecasts released Wednesday, the Fed projected the U.S. economy would contract by between 1.3% and 2.0% this year, with the unemployment rate rising to between 9.2% and 9.6%. In January, the Fed had forecast a milder contraction of between 0.5% and 1.3%, with the jobless rate rising to between 8.5% and 8.8%.
Standard & Poor's on Thursday revised its outlook on Britain to negative from stable, assuming that general government debt burden would reach 100% of GDP. The rating agency reaffirmed its 'AAA' long-term and 'A-1+' short-term sovereign credit ratings.
The U.S. Labor Department said that initial jobless claims came in at 631,000 for the week ended May 16th. This was down 12,000 from the previous week's revised total of 643,000.
Crude for July delivery dropped $1.80 to $60.24 a barrel on the New York Mercantile Exchange, by the time the European markets closed, as a slow economic recovery came into focus.
The FTSEurofirst 300 index of pan-European blue chips closed 2.09% lower at 857.52 points, while the narrower DJ Stoxx 50 index fell 2.05% to 2,098.76 points.
Around Europe, the U.K.'s FTSE 100 index dropped 2.75% to 4,345.47, while France's CAC 40 index fell 2.60% to 3,217.41 and Germany's DAX index slipped 2.74% to 4,900.67.
Banks were among the worst losers. HSBC, Europe's largest bank, slid 3.7%, while Banco Santander, Spain's largest, fell 2.5% and Asia-focused bank Standard Chartered dropped 4.2%. Italy's UniCredit lost 5% and Germany's Commerzbank declined 4.6%.
Heavily weighted oil stocks lost ground after crude oil prices tumbled. BP, Europe's biggest oil company, slipped 2.9%, while Royal/Dutch Shell, the second biggest, fell 2.2% and Total, the third biggest, dropped 3.4%.
Similarly, mining stocks fell after copper prices retreated. BHP Billiton, the world's biggest miner, slipped 6.3%, while Anglo American, the second biggest, fell 2.7% and Rio Tinto, the third biggest, 7.2%. Copper miner Antofagasta lost 7.1%.
British Land, Britain's largest office developer, dropped 8.2% after the company posted an annual loss of £3.88 billion.
Cable & Wireless, Britain's second biggest fixed-line phone company, tumbled 9.6% after the company reported lower a lower profit for its fiscal year 2009.
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