Europe close: Stocks fall on US confidence



LONDON (ShareCast) - - US consumer sentiment falls to one-year low
- Spanish banks' bad loans reach new high
- IMF advises Europe and US to 'not relax'

European equities finished lower Friday as the US consumer sentiment unexpectedly dropped to a one-year low.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 71.3 from 72.9 the prior month, as payroll taxes began to take hold.

US leaders continue to debate over government spending, the debt ceiling and an increase in payroll taxes used to fund Social Security.

While the government has agreed on a bill to reduce the so-called fiscal cliff of tax hikes and spending cuts, it still has a long way to go to fix the country's deficit.

No less promising was a report showing bad loans from Spanish banks had reached a new high in November (Xetra: A0Z24E - news) .

Data from the Bank of Spain showed loans have fallen into arrears rising by €2.0bn to €191bn, or 11.4% of the outstanding portfolio, compared to an 11.2% bad loan rate in October.

Bad loans are expected to keep rising in the coming months, according to analysts, and concerns remain about performance of the banking sector.

It comes despite an injection of emergency cash from the European Union of more than €40bn.

Another discouraging note for markets came from the International Monetary Fund's Managing Director Christine Lagarde who told the US and Europe "it is not time to relax".

She advised the nations to not to let up on their efforts to meet fiscal and reform promises as it was key in eliminating the uncertainty that limits growth.

Miners advance on Chinese data

China's economy accelerated for the first time in two years pushing mining stocks higher.

The country's gross domestic product jumped 7.9% in the fourth quarter from a year earlier, according to the National Bureau of Statistics in Beijing.

Rio Tinto (Xetra: 855018 - news) was among the miners who benefit from the data as shares climbed 1.83% to 3,502.50p.Goldman Sachs (NYSE: GS-PB - news) said the commodity producer may return cash to shareholders. The broker added that the company might seek goodwill after saying it would write down $14bn for its acquisitions of Alcan Inc. and Riversdale Mining. Tom Albanese, who oversaw the purchases as chief executive officer, resigned.

Ophir Energy (Other OTC: OPGYF - news) edges higher

UK oil and gas explorer Ophir Energy advanced 2.47% to 540.00p after Nomura raised its recommendation on the shares to 'buy' from 'reduce'.

French retailer Carrefour (Paris: FR0000120172 - news) gained for the second day with shares up 1.41% to €0.29 after a report that Chief Executive Officer, Georges Plassat, expects to meet his profit targets.

Santhera Pharmaceuticals Holding AG fell 22% to 3.73 francs after a committee of the European Medicines Agency decided not to approve the Raxone drug.

Telenet slid 2.6% to €35.83 following reports Liberty Global (NasdaqGS: LBTYA - news) (LBTYA) said it will not reopen its offer of €35 a share for the Belgian cable operator.

Euro/dollar slides

The euro/dollar edged lower by 0.59%, to the 1.3297 dollar mark.

Front month Brent crude futures are now down by 0.298 dollars to the 110.780 dollar mark on the NYMEX.


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