European stocks weaken on economic gloom, before US earnings

Europe's main stock markets slid on Wednesday as investor sentiment was hit by more gloomy economic news ahead of key US banking results from Goldman Sachs and JPMorgan, dealers said.

London's FTSE 100 index of top companies fell 0.53 percent to 6,084.89 points in late morning deals, Frankfurt's DAX 30 index lost 0.35 percent to 7,649.01 points and in Paris the CAC 40 shed 0.37 percent to 3,683.50.

Weighing on the euro was a report quoting Jean-Claude Juncker, head of the eurozone finance ministers' group and Luxembourg's prime minister, as saying that the euro's value was "dangerously high."

The European single currency slipped to $1.3271 from $1.3304 late in New York on Wednesday. On the London Bullion Market, gold prices decreased to $1,677.85 an ounce from $1,680.50.

"Europe picked up pretty much where they left yesterday as Asia provided no support and the World Bank slashed its 2013 global growth forecast and European car sales for December fell," said trader Anita Paluch at Gekko Global Markets.

"With markets looking slightly overbought, traders are moving to safer assets. Financials will be in focus today as Goldman Sachs and JP Morgan Chase are due to release their results today," she added.

European equities had taken a knock on Tuesday after weaker-than-expected 2012 economic growth data for Germany.

In another heavy blow on Wednesday, the eurozone powerhouse slashed its official 2013 growth forecast to 0.4 percent, compared with the prior estimate of 1.0 percent. However, it also forecast a solid rebound in 2014.

Adding to weak sentiment, the World Bank cut its 2013 global economic growth forecast to 2.4 percent, from the previous figure of 3.0 percent, and described the recovery as "fragile and uncertain".

And in more downbeat news, industry data showed on Wednesday that European auto sales plunged to their lowest point in 17 years in 2012, while French carmaker Renault announced a new raft of 7,500 job cuts.

New car registrations in the European Union fell by 8.2 percent from their 2011 level to 12.05 million units last year, the European Automobile Manufacturers' Association said.

The news weighed on the automaking sector, with Renault shares sliding 1.53 percent to 40.95 euros in Paris deals. Germany's Daimler and Volkswagen saw their share prices drop by 0.61 percent and 0.43 percent, to stand at 43.52 euros and 174.75 euros respectively.

Asian stock markets closed lower on Wednesday as dealers took profits following recent gains, with Tokyo also suffering heavy losses as the yen rebounded strongly after weeks of steep declines.

Suppliers of Boeing's Dreamliner slid in Tokyo after two Japanese airlines grounded their fleets of the aircraft after one made an emergency landing, but shares of the carriers themselves did not take a big hit.

Analysts said that Boeing, which is traded mainly in New York, would likely be the focus of investor concern.

Tokyo stocks plunged 2.56 percent, Shanghai slipped 0.70 percent, Seoul dropped 0.32 percent, and Hong Kong finished 0.10 percent lower, while Sydney gained 0.46 percent in value.

"European equities are trading slightly lower this morning... with pressure arising out of Asia overnight where the recent rapid ascent especially in Japan has come to an abrupt halt due to profit taking and a stronger Japanese yen," said ETX Capital analyst Markus Huber.

"There is very little new data out in Europe today, the main focus instead will be on US corporate earnings with banking heavyweights Goldman Sachs and JPMorgan due to report quarterly figures," he added.

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