Europe chem stocks fall on fresh concerns over eurozone debt crisis

08 May 2012 17:09  [Source: ICIS news]

LONDON (ICIS)--European chemical stocks fell on Tuesday, in line with financial markets, amid fresh concerns over the eurozone debt crisis following elections in France and Greece.

At closing, the UK’s FTSE 100 was 1.78% lower than the previous close, Germany’s DAX had fallen by 1.94%, and the CAC 40 in France was down sharply by 2.95%.

In France, Francois Hollande, who has pledged for fewer austerity measures, defeated President Nicolas Sarkozy on Sunday, which in turn led the euro to weaken to a three-month low on Monday.

The new socialist leader has promised supporters that his government will renegotiate its fiscal pact with Europe to reduce austerity plans. However, a renegotiation is likely to cause some economic upheaval for France and the rest of Europe.

Meanwhile, Greek voters voiced their displeasure over the severity of the austerity measures by flocking to anti-bailout political parties, leaving the two biggest parties short of the clear majority needed to govern the country.

The inability of Greece’s main centre-right party to form a coalition government with other parties has raised fresh concerns that the country may default on its sovereign debts and drop out of the eurozone.

Unless the country can form a coalition government and continue on its path of austerity, it will not receive its next tranche of bailout funds which will force Greece into a disorderly default.

With European indices trading lower, the Dow Jones Euro Stoxx Chemicals index was down by 1.80%, as shares in many of Europe’s major chemical companies fell from the previous close.

Petrochemical major BASF’s shares had fallen by 2.81 %, while fellow Germany-based chemical company Bayer’s shares were trading down by 1.80%.

Shares in Germany-based fertilizer producer K+S and chemical firm Wacker Chemie were trading down by 1.47% and 1.99% respectively, while France-based Arkema’s shares were trading down by 4.10% from the previous close.

However, one company bucking the downward trend was Belgium’s Solvay, which saw its shares rise by nearly 10% on Tuesday after the company’s first-quarter earnings beat market estimates.

Meanwhile, crude oil futures weakened by more than $1.00/bbl on the back of concerns over global economic recovery and political instability in the eurozone.

Additional reporting by Nurluqman Suratman and Kawai Wong


By: Franco Capaldo
+44 (0)20 8652 3214



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