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Market Update

European Market Drop 1% on Central Bank Comments

Author: Sarla Buch
Last Update: 3:24 AM ET September 09 2016

4:00 PM Frankfurt – MasterCard faces £14 billion of legal claims brought by the U.K. consumer watchdog. JD Wetherspoon profit surged 14%. France controlled Total SA said it intends to acquire 75% stake in shale oil field jointly controlled by Chesapeake in Texas.

European markets fell sharply after nervous investors pulled back and parsed signals form central banks across the Atlantic.

European markets dropped sharply in the final hour of trading after investors turned bearish and expressed disappointment over the rate timetable expectations in the U.S.

Comments from the U.S. Federal Reserve official Eric Rosengren, generally in favour of low rate environment, about the risks associated with low interest rates for longer term, unsettled the market.

In addition, the latest comments from the European Central Bank chief Mario Draghi also didn’t include timetable extension for the current stimulus program also added to market jitters.

In London trading, FTSE 100 index dropped 81.75 or 1.2% to 6,776.95 and in Frankfurt the DAX index declined 107.53 or 1% to 10,567.76.

In Paris, CAC 40 index slumped 51.22 or 1.1% to 4,490.98.

For the week, FTSE 100 index declined 1.7%, the DAX index fell 1.1% and the CAC 40 index slipped 1.1%.

Derwent London Plc slipped 1.4% to 2,743 pence after the U.K.-based real estate developer agreed to sell the leasehold interest in the property located at 75 Wells Street W1 London for £40.9 million to a private investor.

The property developer said multi-let building will generate net annual rent of £1.28 million and 6,460 square feet of vacant offices across three part floors.

Greene King Plc declined 4.5% to 802.50 pence after the U.K.-based pub and brewer retailer said comparable sales in the eighteen-week period ending on September 4 increased 1.7%.

The brewer retailer said net income jumped 4.5% driven by European Football Championships and better weather but in own-brewed Brewing & Brands volume fell 0.5%.

MasterCard Inc, credit and debit card payment systems provider was sued on behalf of U.K. consumers for £14 billion or $18.72 billion for allegedly charging excessive fees while their card swiping between 1992 and 2008.

The case was filed by the former chief financial services ombudsman Walter Merricks, according to the court documents filed at the Competition Appeal Tribunal in London.

The suit alleges that MasterCard charged excessive fees for 16 years and almost 46 million people in Britain could potentially benefit from the legal case.

In 2014, the European Court of Justice ruled that regulators had right to condemn the cost of inter-bank charges that retailers pay banks to process card payments and set the maximum fees not to exceed 0.3%.

MasterCard faced similar charges in the European Union Court and the case dragged for seven years and forcing the payment processing company to lower interbank fees from 1% to 0.2% for debit and 0.3% for credit card charges.

In a statement, MasterCard disagreed with allegations and the company said “we continue to firmly disagree with the basis of this claim and we intend to oppose it vigorously.”

J D Wetherspoon Plc jumped 4.9% to 969.50 pence after the U.K.-based pubs and hotels operator said revenues in the year ending on July 24 jumped 5.4% from a year ago to $1.60 billion.

The pub operator said comparable store sales in the year increased 3.3% and sales in food business advanced 3.5% but sales in slot/fruit machine segment decreased 2.2%.

Net profit in the year surged 14.3% from a year ago to $51.2 million compared to the $44.8 million and diluted earnings per share increased to 43.4 cents from 36.7 cents.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc