4:30 PM Frankfurt – European markets traded lower and markets in Italy plunged more than 3% after energy service company issued profit warning. Spanish economy shrank for the sixth quarter in a row by 0.7%.
European markets traded sharply lower and the euro gained to a 14-month high. Indexes were lower after energy sector stocks fell and extended losses in the afternoon after the U.S. economy unexpectedly contracted in the fourth quarter.
The euro closed at $1.3552 and rose to a 14-month high.
In London trading FTSE 100 index decreased 0.2% or 15.2 to 6,324 and in Frankfurt DAX index fell 45.2 or 0.6% to 7,803. In Paris, CAC 40 index decreased 0.6% or 21.4 to 3,764.
The benchmark index in Milan dropped 3.4% after energy companies listed on the exchange led the decliners.
The energy sector stocks fell sharply after the oil platform services provider plunged 34% after it issued profit warning. Imperial Tobacco also dropped 4% after it guided lower earnings.
Spanish economy contracted 0.7% in the fourth quarter from the third quarter and fell 1.8% from a year ago quarter according to the statistics agency in Madrid.
For all of 2012, the economy contracted 1.37% and declined for the fifth quarter on annual basis. The National Statistics Institute said the final estimate would be released on February 28.
Last week the agency said nationwide unemployment increased 1% in the fourth quarter to 26.02% with 5.97 million people unemployed and jobless rate among young people soared to 52.3%.
U.S. economy in the fourth quarter contracted at annual rate of 0.1% surprising most economists who were looking for the expansion of at least 0.3% or more. The preliminary estimate is expected to be revised two more times in February and March.
For the year 2012, the economy expanded at 2.2%.
The sharp fall in government spending was driven by a decline in military spending plunge of 22%, the largest since 1972.
Stocks in Review
Saipem plummeted 34% to 20 euros after the oil and gas contractor lowered its estimate of operating earnings for 2012 by 6% to 1.5 billion euros and guided operating earnings to drop further to 750 million euros in 2013.
Eni SpA, the oil explorer that controls 43% stake in Saipem, declined 4.7% to 18.40 euros.
Other energy companies in the region also closed lower. Subsea 7 SA decreased 5.4% to 132 kroner and Technip SA plunged 7% to 77.45 euros.
Luxottica Group SpA increased 2% to 34.30 euros after the largest sunglass maker and retailer said sales increased 14% in 2012 to 7.09 billion euros.
Imperial Tobacco Group Plc dropped 4% to 2,361 pence after the tobacco maker estimated lower profit in the first half of this year.
Nordea increased 3% to SK68.45 after the lender said net income increased to 840 million euros from 785 million euros a year ago.
Roche Holding AG declined 1.4% to Sfr198.30 after the largest maker of cancer drugs increased its dividend to Sfr7.35 a share and reported full-year 2012 earnings per share excluding some items of Sfr13.62.