Global slowdown fears send European shares to six-month lows

Fri Jun 1, 2012 12:50pm EDT
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By Francesco Canepa

LONDON (Reuters) - European shares tumbled to six-month lows on Friday and braced for further losses as weak economic data from the United States and Europe cast new shadows on global economic recovery prospects.

Markets extended losses in the afternoon, when data showed U.S. job growth braked sharply in May and the unemployment rate rose for the first time since June, coming on the back of a raft of soft national factory surveys in Europe published earlier on Friday.

"Today's non-farm payrolls data confirms the U.S. economy is not heading for a strong recovery this year," Michiel Van Cranenburgh, a director at Paris-based Neuflize Private Assets, which manages around 4 billion euros chiefly invested in European equities.

"We try to avoid stocks that are dependent on growth in the U.S. or Europe because we're clearly not optimistic for the next couple of years."

The euro zone's manufacturing sector shrank at its steepest pace in nearly three years in May, with the contraction also affecting Germany, in a sign Europe's largest and so far most resilient economy was also suffering from the repercussions of the euro zone crisis.

Frankfurt's Dax, which outpaced all other major European national benchmarks so far this year, was the worst performer on Friday as it fell 3.4 percent to a five-month low, while France's CAC-40 hit a six-month closing trough as it ended down 2.2 percent.

The pan-European FTSEurofirst 300 index closed 1.9 percent lower at 954.74 points, a closing level not seen since December, while the Euro STOXX 50 index of euro zone blue chips fell to a seven-month closing low of 2,068.66 points, down 2.4 percent.

Volumes on the indexes were above their anaemic 90-day average at 120 percent for the FTSEurofirst 300 and 133 percent for the Euro STOXX 50, suggesting a relatively high number of investors took part in the sell-off.   Continued...

A man looks at information screens at the Madrid stock exchange May 23, 2012. REUTERS/Andrea Comas