European Markets Sank Due To Banking Crisis In Turkey

BRUSSELS/FRANKFURT/PARIS (Alliance News) - The European markets ended Friday's session firmly ...

Alliance News 10 August, 2018 | 5:08PM
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BRUSSELS/FRANKFURT/PARIS (Alliance News) - The European markets ended Friday's session firmly in the red. Concerns over global trade and the banking crisis in Turkey weighed on sentiment at the end of the trading week.

The Turkish Lira nose-dived against the US dollar in the European session on Friday, plunging to an all-time low, following a news report that the European Central Bank has raised concerns over the impact of a weak lira on European banks.

The ECB is more concerned about the exposure of some banks in France, Italy and Spain to Turkey's problems, according to a report in the Financial Times.

Those banks are particularly BBVA of Spain, Italy's UniCredit and BNP Paribas of France.

The currency has been falling amid widening rift between the US and Turkey and intensifying worries about the state of the economy.

Diplomatic talks between Washington and Ankara in Washington to resolve issues appeared to break down this week. Both the nations were at logger-heads over the detention of American pastor Andrew Brunson in Turkey on terrorism charges, as well as US sanctions on Turkish ministers.

Turkish President Tayyip Erdogan on Thursday played down concerns over the falling currency, calling citizens to "ignore campaigns against Turkey."

"Don't forget, if they have their dollars, we have our people, our God. We are working hard. Look at what we were 16 years ago and look at us now," he told supporters in the Black Sea province of Rize.

The pan-European Stoxx Europe 600 index weakened by 1.1%. The Euro Stoxx 50 index of eurozone bluechip stocks decreased 2.0%, while the Stoxx Europe 50 index, which includes some major UK companies, lost 1.2%.

The DAX of Germany dropped 2.0% and the CAC of France fell 1.6%. The FTSE 100 of the UK declined 1.0% and the SMI of Switzerland finished lower by 1.3%.

In Frankfurt, energy group Innogy dropped 0.5% after reporting a 10% fall in first-half operating profit.

In London, budget carrier Ryanair Holdings declined 3.7% after grounding 400 flights amid a coordinated 24-hour workers strike.

Diageo finished marginally lower after announcing it would start buying back up to GBP1.4 billion (USD1.79 billion) of its shares until Jan 31.

Biotechnology firm Novozymes declined 3.3% in Copenhagen after its second-quarter results came in below expectations.

France's industrial and manufacturing output rebounded in June driven by a recovery in petroleum output, data from the statistical office Insee showed Friday. Industrial output climbed 0.6% month-on-month in June, reversing a 0.2% fall in May. Production was expected to gain 0.5%.

UK economic growth doubled in the second quarter driven by stronger growth in both services and construction sectors, first quarterly estimate from the Office for National Statistics showed Friday. Gross domestic product rose 0.4%, faster than the 0.2% expansion seen in the first quarter. The rate came in line with expectations.

UK industrial production expanded in June after falling for three straight months, data from the Office for National Statistics showed Friday. Industrial production climbed 0.4% month-on-month, reversing a 0.2% fall in May. This was the first increase in four months. Output was expected to climb 0.3%.

The UK's visible trade deficit narrowed in June, while the surplus in services grew, leading to a smaller total trade gap, data from the Office for National Statistics showed Friday. The visible trade deficit decreased to GBP11.38 billion from GBP12.52 billion in May. Economists had forecast a shortfall of GBP11.90 billion.

Consumer prices in the US showed a modest increase in the month of July, according to a report released by the Labor Department on Friday. The Labor Department said its consumer price index rose by 0.2% in July after inching up by 0.1% in June. The increase in prices matched economist estimates.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar
Rating
Ryanair Holdings PLC 10.78 EUR 0.09 -
Diageo PLC 2,832.50 GBX 0.21
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