Europe chemical stock prices drop on new recession fears

10 November 2011 13:06  [Source: ICIS news]

LONDON (ICIS)--European chemical stocks fell further on Thursday as the EU warned of a new recession and markets declined on Italy’s record-high borrowing costs.

The European Commission forecast that real GDP growth in the region is likely to stall around the end of the year with some member state economies contracting. Its growth forecast for 2012 was cut to 0.5% from 1.8%. 

"Growth has stalled in Europe, and there is a risk of a new recession," said the commission's vice-president for economic and monetary affairs Olli Rehn.

The commission's report said GDP in the EU would stagnate until 2013 when a return to slow growth of about 1.5% is expected.

European markets fell earlier on Thursday after yields on Italy’s 10-year bonds remained above 7.0%, which many believe to be unsustainable.

Markets were also affected by Greece’s struggle to appoint a new prime minister, causing concerns that the country could leave the euro amid the debt crisis.

Meanwhile, UK interest rates were held at a record low 0.5%, unchanged since early 2009.   

At 10.20 GMT, the UK’s FTSE 100 index was trading at 0.35% down on the previous day’s close, and the CAC 40 in France was down by 0.15%.

However, Germany’s DAX had increased by 0.47% on the previous close.

At 10.20 GMT, the Dow Jones Euro Stoxx Chemicals index was trading down 0.25%, as prices for the shares of some major European chemical companies fell.

France-based industrial gases company Air Liquide was down 0.10%, while Dutch coatings firm AkzoNobel’s shares dropped sharply by 5.47%. German specialty chemicals maker LANXESS’s shares decreased 0.35% and Norwegian fertilizers producer Yara International’s shares dropped steeply by 1.68%.

However, German chemical major BASF’s shares rose by 0.46% and Germany-based chemical company Bayer’s shares rose by 0.24%.

($1 = €0.74)

Read Paul Hodges’ Chemicals and the Economy blog

By: Leigh Stringer
+44 208 652 3214

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