European stocks dropped for a third straight week, the longest stretch of losses since March, as concern mounted that the economy won’t recover soon.
Volkswagen AG slumped 6.3 percent, leading declines in automakers, after US car sales fell in June and Credit Suisse Group AG cut its assessment of the industry. ThyssenKrupp AG, Germany’s largest steelmaker, and Finland’s Outokumpu Oyj dropped more than 3 percent as an industry group said European steel consumption will fall this year.
The Dow Jones STOXX 600 Index fell 0.2 percent this week to 204.08 after reports showed unemployment in Europe and the US rose.
The measure has fallen 4.8 percent since June 12 on speculation share prices have outpaced the outlook for economic growth after a three-month rally pushed valuations to 25.4 times earnings, near the highest level since 2004. The benchmark index for European equities still rose 17 percent in the second quarter, the biggest gain since 1999.
“Macroeconomic data are still disappointing and show economic recovery is not yet a reality,” said Emmanuel Soupre, who helps manage about US$18 billion at Neuflize OBC in Paris.
“We are going to keep fluctuating between optimism and pessimism in the months to come,” Soupre said.
Unemployment in the 16-member euro region increased to 9.5 percent in May from a revised 9.3 percent in April, the EU statistics office in Luxembourg said last week. The US unemployment rate rose to 9.5 percent last month, the highest since August 1983.
Bank shares were the best-performing group in the STOXX 600 this week, adding 1.2 percent. Barclays PLC, the UK’s third-biggest bank, rallied 11 percent.
UK consumer confidence increased to the highest level in 14 months last month as shoppers became more optimistic that the worst of the recession is over, GfK NOP said. Debenhams PLC, the UK’s second-largest department-store company, rose 12 percent.
A separate report showed confidence among US consumers slipped unexpectedly last month. The Conference Board’s sentiment index decreased to 49.3 from a revised 54.8 in May.
National benchmark indexes fell in eight of the 18 western European markets. The UK’s FTSE 100 slipped 0.1 percent, while Germany’s DAX dropped 1.4 percent. France’s CAC retreated 0.3 percent as PSA Peugeot Citroen and Renault SA declined.
European Central Bank (ECB) President Jean-Claude Trichet signaled the ECB has no immediate plans to cut interest rates again and said the euro region’s economy will start to recover in the middle of next year. The ECB kept its key lending rate at a record low of 1 percent.
Volkswagen slumped 6.3 percent as Europe’s largest carmaker said US sales last month fell 18 percent. Separately, German car production is expected to drop 17 percent this year, said Matthias Wissmann, the president of the country’s carmakers association, known as VDA.
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
SECURITY: The purpose for giving Hong Kong and Macau residents more lenient paths to permanent residency no longer applies due to China’s policies, a source said The government is considering removing an optional path to citizenship for residents from Hong Kong and Macau, and lengthening the terms for permanent residence eligibility, a source said yesterday. In a bid to prevent the Chinese Communist Party (CCP) from infiltrating Taiwan through immigration from Hong Kong and Macau, the government could amend immigration laws for residents of the territories who currently receive preferential treatment, an official familiar with the matter speaking on condition of anonymity said. The move was part of “national security-related legislative reform,” they added. Under the amendments, arrivals from the Chinese territories would have to reside in Taiwan for
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