Welcome to our new website! Let us know what you think..

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

FTSE under pressure as eurozone slumps back into recession

FTSE under pressure as eurozone slumps back into recession

Despite France and Germany growing in the third quarter the eurozone is now in its second recession since the financial crisis began.

National growth data for quarter three showed that even though France and Germany's economies expanded by 0.2%, the single currency bloc could not skirt a fully blown slump.

The eurozone contracted by 0.1% in the last three months, following its 0.2% contraction in quarter two.

Even before the official data was unveiled economists warned the eurozone could not escape the gloom, with Capital Economics' weighted average of the available data predicting the 0.1% contraction.

Although the expansions in France and Germany came as a positive surprise, these were not enough to ease the overall squeeze on Europe, sending the FTSE 100 down as traders digested the data.

At shortly after 10am the index was down 0.39% at 5,699.

Figures for the individual eurozone constituents are still coming through, though initial data suggest that while consumer spending edged up overall in the eurozone in the third quarter, investment was very weak.

Howard Archer, of IHS Global Insight, said that if it had not been for net trade holding up well, the contraction would have been deeper.

Looking forward, chief European economist Archer said the prospects for the single currency zone in the fourth quarter look bleak, spelling a likely cut in eurozone interest rates.

'With the eurozone seemingly headed for further GDP contraction in the fourth quarter after moving officially into recession in the third quarter, and with the underlying inflation situation in the single currency area looking far from alarming, we believe the ECB will take interest rates down from 0.75% to 0.50% sooner rather than later,' he said.

Leave a comment
Citywire TV
Play Gervais Williams: the real reason to worry about Quindell

Gervais Williams: the real reason to worry about Quindell

Citywire AA-rated manager Gervais Williams has argued that sentiment is the true danger to Quindell.

Play AA-rated Lofthouse: 'maverick' tobacco settlements won't stop M&A

AA-rated Lofthouse: 'maverick' tobacco settlements won't stop M&A

Henderson International Income trust manager Ben Lofthouse shares his thoughts on recent developments in the tobacco sector in this video.

1 Play Renewable energy: what I found on my solar farm trip

Renewable energy: what I found on my solar farm trip

Renewable energy is attracting a lot of investor interest, so I headed to the UK's largest solar farm to find out more.

Your Business: Cover Star Club

Profile: Quilter Cheviot boss Baines sees more consolidation ahead

Profile: Quilter Cheviot boss Baines sees more consolidation ahead

Nineteen months on from the merger of Quilter Cheviot chief executive Martin Baines says the deal is now paying dividends.

Wealth Manager on Twitter