(RTTNews.com) - European markets ended Monday's trading session with mixed results. The weakness across Asia was one factor, as China's service sector data missed estimates. Beijing also tightened mortgage rules to curb property speculation. The so called "sequester" in the U.S. has also kicked in. The automatic budget cuts could threaten the fragile U.S. economic recovery.
Eurozone's falling inflation and rising unemployment may put pressure on the European Central Bank (ECB) to loosen its monetary policy, and the bank is expected to discuss an interest rate cut or other unconventional policies at next week's meeting, Capital Economics Senior European Economist Jennifer McKeown said Monday.
The firm said that the recent rise in unemployment and fall in inflation suggest that euro-zone pay growth will come under more downward pressure in the coming months.
The employment outlook suggests that the situation is not about to improve in the near term, and the weak labor market conditions are expected to add to the drag on consumer spending from fiscal tightening, the economist noted.
U.K. banks' reduced their lending to firms and households in the fourth quarter dampening hopes that the lending scheme will boost recovery, data from the Bank of England showed Monday.
The net lending of banks participating in the Funding for Lending Scheme, shrank GBP 2.4 billion during the quarter ending December.
About 11 participants made total FLS drawdowns of GBP 9.5 billion, taking the total amount drawn to GBP 13.8 billion since the programme started in August.
U.K. manufacturers have ambitious strategies for growth, but they are not investing enough to deliver them, a survey from EEF, the manufacturer' organization showed Monday.
According to the survey of over 250 companies, nearly nine in ten firms want to invest to improve productivity, three-quarters to adopt new technology and seven in ten to develop capacity to manufacture new products.
Although the trends are positive, investment is still 14 percent below its 2008 peak. A fifth of manufacturers feel they are falling behind their international competitors.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.25 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, finished unchanged.
The CAC 40 of France climbed by 0.27 percent, but the DAX of Germany fell by 0.21 percent. The FTSE 100 of the U.K. dropped by 0.52 percent and the SMI of Switzerland decreased by 0.15 percent.
In Frankfurt, Deutsche Bank declined by 1.25 percent. Indian property developer Unitech said it intends to add allegations linked to interest-rate rigging to an existing dispute with the German lender.
Porsche dropped by 1.90 percent, despite its unit Porsche Cars North America Inc., reporting a 31 percent increase in its U.S. vehicle sales in February.
Volkswagen lost 0.94 percent, on a report that its Spanish subsidiary Seat may not yet be profitable this year.
In Paris, France Telecom surged by 5.71 percent. Morgan Stanley upgraded its rating on the stock to "Overweight" from "Underweight."
ArcelorMittal decreased by 2.62 percent, after Goldman Sachs reduced its price target on the stock.
In London, HSBC Holdings fell by 2.49 percent. The bank reported full-year pre-tax profit of $20.6 billion, down 6 percent from $21.87 billion last year.
Royal Bank of Scotland declined by 2.26 percent, Lloyds Banking Group fell by 3.66 percent and Barclays lost 1.01 percent.
Miners turned in a weak performance Monday, on concerns that China's recovery from a recent slowdown is losing steam. BHP Billiton and Rio Tinto decreased by 2.07 percent and 3.66 percent respectively. Kazakhmys sank by 5.93 percent.
Shares of Anglo American lost 2.68 percent, after Nomura downgraded the miner to "Reduce" from "Neutral."
GKN climbed by 2.41 percent, after Goldman Sachs upgraded the stock to "Neutral" from "Sell."
Debenhams plunged by 14.69 percent, after issuing a profit warning.
Eurozone investor confidence declined in March after improving for six months in a row, data released by the think-tank Sentix showed Monday. The index fell to -10.6 in March, the weakest since December 2012, from -3.9 in the prior month. The March figure was worse-than the expected level of -4.6 points.
Eurozone's producer price inflation slowed to the lowest level in six months in January, giving room for the European Central Bank to lower its policy rate at this week's meeting to revive the flagging economy.
Producer price inflation slowed to 1.9 percent from 2.1 percent in December, statistical office Eurostat said on Monday. The latest figure matched economists' expectations. The rate of growth was the lowest since July 2012, when prices rose 1.6 percent.
The marked fall in Eurozone's producer price inflation in January, which is in line with the latest consumer price data, indicates that the European Central bank (ECB) has ample scope for lowering interest rates at this week's meeting, IHS Global Insight Chief UK and European Economist Howard Archer said Monday.
The British construction activity declined at the sharpest pace since October 2009 on solid reduction in output and new works, a survey by Markit Economics showed Monday. The Markit/Chartered Institute of Purchasing & Supply Purchasing Managers' Index fell to 46.8 in February from 48.7 in January. Economists had forecast the index to rise to 49. Readings below 50 suggests contraction of the sector.
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