European stocks pick up after heavy losses

By AFP

July 15, 2010 Updated May 22, 2009 at 8:01 AM CDT

European stock markets picked up on Friday after recent heavy losses, helped by a late recovery from early lows on Wall Street overnight, dealers said.

London's FTSE 100 index of leading shares rose 0.73 percent to 4,377.34 points in late morning trade.

Frankfurt's DAX 30 gained 0.94 percent to 4,946.88 points and in Paris the CAC 40 advanced 0.99 percent to 3,249.18 nearing the half-way mark.

The DJ Euro Stoxx 50 index of leading eurozone shares was up 1.02 percent to 2,448.39 points.

The European single currency climbed to 1.3961 dollars, slightly off a near five-month high reached earlier Friday.

Europe's main stock markets shed almost 3.0 percent on Thursday as equities in London suffered from a warning by credit rater Standard and Poor's that it may downgrade Britain's debt ratings.

Markets rebounded Friday, "helped along by a late bounce back in New York trading (on Thursday)," said IG Index market strategist Anthony Grech.

"Although we have seen some quite impressive swings up and down this week, the net result is very little change from where we were last Friday ... We still seem to be in the treading water phase following the strong gains seen since March," he added.

Despite a late rally, Wall Street ended sharply lower on Thursday as weaker-than-expected US unemployment data and public debt worries clouded the outlook for a recovery from the prolonged recession, traders said.

The Dow Jones Industrial Average of 30 blue-chip stocks sank 1.54 percent to finish at 8,292.13 points. The tech-rich Nasdaq dropped 1.89 percent to 1,695.25 points and the broad-market Standard & Poor's 500 index shed 1.68 percent to 888.33.

Charles Schwab & Co. analysts said news that Britain may lose its top AAA credit rating because of ballooning public debt delivered a painful reminder of the depth of the global recession.

"Markets were forced to consider the impact of deteriorating financial positions for many of the world's largest governments," the analysts said.

International ratings agency S&P on Thursday downgraded its outlook on Britain's economy, to "negative" from "stable," because of the country's worsening public finances.

Britain's economy is meanwhile contracting at its sharpest pace in almost three decades amid the worst global downturn since the 1930s, official data showed Friday, but analysts said the worst is likely over.

British gross domestic product (GDP) shrank 1.9 percent during the first quarter of 2009 compared with the final three months of last year, according to the Office for National Statistics (ONS). The data was unchanged from an initial estimate it gave last month.

In company news, British Airways said it suffered a 375 million-pound (590 million-dollar, 425 million-euro) loss in the past year on high fuel costs and slumping demand, adding it saw no sign of immediate improvement.

BA's share price fell more than six percent in initial reaction to the data and news it was not paying a dividend but later recovered to show a loss of just 1.41 percent to 160.5 pence.

In Asia, Tokyo's benchmark Nikkei-225 index closed down 0.41 percent to 9,225.81 points on Friday as the losses on Wall Street and a stronger yen scared off buyers, traders said.

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