LONDON—European stocks fell Friday, with losses on Wall Street overnight adding to downside pressure amid continuing concerns about the potential drag on growth in the euro zone as governments in the region take measures to bring their swelling fiscal deficits under control.
The pan-European Stoxx 600 Index declined 0.3%. London's FTSE 100 lost 0.2%, Frankfurt's DAX was down 0.4% and the CAC-40 in Paris fell 0.8%. Madrid's IBEX-35 declined 0.9%.
The events of the past few weeks should constantly serve as reminders that risks still exist in a fundamentally weak global economy and jittery markets, said Crédit Agricole. "Fresh austerity measures in Greece, Spain and Portugal failed to assuage market fears, and instead the measures have only heightened concerns about social unrest and a weakening growth outlook," the bank added.
The euro was holding steady against the dollar, although many traders continued to be long-term bears. "Four days on from Monday's mega European bailout package, the market finds itself pondering the medium-term impact of Europe's massive debt burden," said David Croy, interest rates strategist at ANZ Bank in Wellington. "The bailout can address liquidity concerns, but austerity is needed to get debt levels back under control. And fiscal austerity implies slower growth, which in turn suggests monetary policy will be looser for longer, with low interest rates adding more downward pressure on the euro," he added.
The euro was recently trading at $1.2567, up from $1.2535 in New York late Thursday. The dollar was at ¥93.03, up from ¥92.75.
On Wall Street Thursday, stocks fell as earnings guidance and results from retailers disappointed. The Dow Jones Industrial Average lost 1.0% to 10,782.95, while the S&P 500 declined1.2% to 1157.44 and the Nasdaq Composite fell 1.2% to 2394.36.
Asian stock markets were mostly lower Friday, with Japanese exporters falling on the yen's recent strength, while shares in Thailand fell as clashes late Thursday between troops and anti-government protesters left several injured and one person dead. Japan's Nikkei 225 dropped 1.5%, Hong Kong's Hang Seng index fell 0.6% and the Shanghai Composite was off 0.8%. Thailand's SET index fell 1.2%.
Spot gold was at $1234.90 per troy ounce, up $2.25 from the New York close. But June Nymex crude oil futures were down 55 cents at $73.85 per barrel.
Elsewhere, the sovereign debt markets were higher, with the June bund contract up 0.15 at 126.01.
