4:00 PM Frankfurt – European indexes declined after China raised the reserve ratio by 50 basis points. Ireland edged closer to accepting bailout package. German PPI rose in October. Greek current account deficit narrowed and Italy industrial orders fell in September.
World markets declined after China took yet another step in cooling real estate market. Banks were asked to hold higher reserves and restrict lending for the remainder of the year.
In Paris CAC 40 Index decreased 35.97 or 0.93% to close at 3,832.00 and in Frankfurt DAX Index edged lower 27.12 or 0.40% to close at 6,804.99. For the week, the CAC 40 Index fell 0.06% and the DAX Index decreased 0.47%.
Irish Republic Edges Closer To Bailout
The Republic of Ireland is edging closer to accepting a multi-billion-euro cash injection into its loss making banking sector, after the nation''s finance minister admitted that Dublin will have to accept external aid.
Brian Lenihan told Parliament on Thursday that it would be a ""very desirable outcome"" if a contingency fund is set up by the European Union, the International Monetary Fund and the European Central Bank.
France and Germany are reported to be unhappy with the Republic''s relatively low 12.5% corporation tax rate, which is widely credited with fueling a large inflow of foreign investment into Ireland during the boom years leading up to the crisis. Financial Times quoted one French official as saying the low tax rate was ""almost predatory.""
China Raises Reserve Ratio
The People''s Bank of China stated that it would raise the reserve ratio by 50 basis points, effective November 29, in an effort to manage its surging growth by limiting the flow of cheap cash in its economy.
European Banking Congress
International Monetary Fund Managing Director Dominique Strauss-Khan reportedly said European sovereign debt crisis is not over and he urged more international co-ordination in the wake of fragile global recovery.
Speaking at the European Banking Congress in Frankfurt, Strauss-Khan said co-operation among euro-zone nations is moving slowly.
The European Central Bank President Jean-Claude Trichet on Friday said a strong U.S. dollar is very important. Speaking in a panel discussion with Federal Reserve Chairman Ben Bernanke at an European Banking Congress in Frankfurt, Trichet reportedly said he strongly shared Bernanke''s view that a strong dollar vis-à-vis the other major floating currencies is very important.
Juergen Stark Urges Prohibition of Government Debt Monetization
The ECB Executive Board member Juergen Stark said on Friday it is necessary to prohibit government debt monetization. Speaking at the 6th ECB Central Banking Conference, Stark said some aspects of the monetary framework, such as the independence of the central bank, prohibition of government debt monetization, centrality of price stability and transparent communication will have to survive the financial crisis.
Investor sentiment in central and Eastern Europe region improved ""significantly"" in November along with more optimistic outlook on economic growth, the Centre for European Economic Research or ZEW said in a report on Friday.
The ZEW-Erste Group Bank CEE indicator increased 12.1 points to 31.4 points in November, signaling improved economic expectations on a six month horizon in the region, including Turkey.
German PPI Rises
Germany''s producer price inflation accelerated in October from the previous year, the Federal Statistics Office said on Friday. The producer price index rose 4.3% on an annual basis in October, compared to a 3.9% growth in September. Producer prices increased for the seventh consecutive month.
The latest annual growth was mainly due to rise in prices of energy, the Destatis said. Energy prices increased 0.7% on a monthly basis and grew 7.2% over a year ago.