Stock markets slide after ECB head slashes eurozone growth hope
Friday 07 June 2013
The European Central Bank sent tremors through stock markets yesterday as president Mario Draghi cut growth forecasts for the single currency bloc this year.
The bank – which kept its key interest rate on hold at 0.5 per cent – now forecasts that the eurozone's economy will shrink 0.6 per cent this year, worse than its previous estimates of a 0.5 per cent slide.
Mr Draghi said the economy "should stabilise and recover in the course of the year", but the eurozone has been mired in recession since the end of 2011 and the latest signs of bad news sent City dealing rooms out of equities.
London's FTSE 100 Index, which was closing in on all-time highs of 6,930 just two weeks ago, sank by 1.3 per cent to 6,336, the lowest since mid-April. France's CAC 40 and Germany's Dax sank 0.99 per cent and 1.2 per cent respectively.
Despite six straight quarters of shrinking growth, Mr Draghi said there "wasn't any directional change that would justify taking action at this time".
He offered no further hints on efforts to boost small business lending as well as negative deposit rates for eurozone banks – in effect charging banks to leave cash with the ECB. The Organisation for Economic Co-operation and Development think-tank called on the central bank to consider quantitative easing last week but the ECB remains opposed.
The outgoing Bank of England Governor, Sir Mervyn King, meanwhile brought down the curtain on 16 years of policymaking but failed to persuade rate-setting colleagues to pump more cash into the economy.
The Bank's Monetary Policy Committee voted not to expand quantitative easing beyond the current £375bn, holding interest ratest at their current record low of 0.5 per cent, where they have been since 2009.
Sir Mervyn's term ends on 30 June when he hands over to Mark Carney.
- 1 Scottish independence: Ireland since 1919 is a lesson for Scotland in what a Yes vote means
- 2 Thailand deaths: Pair's bloodied bodies found naked on Koh Tao beach
- 3 Lego breaks out of the toy box and heads for the gallery
- 4 Julian Assange and Edward Snowden join piracy mogul Kim Dotcom’s political campaign in New Zealand
Thailand deaths: Pair's bloodied bodies found naked on Koh Tao beach
Jihadi John': MI5 may have identified Isis militant who killed David Haines but options limited
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: Police will be on high alert on Friday whatever the result
David Haines beheading: David Cameron says Britain will hunt down Isis 'monsters' shown in video murdering aid worker
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
Salmond accused of laughing off national debt with ‘what are they going to do: invade?’ joke
iJobs Money & Business
£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...
£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...