26 September 2012 13:45 [Source: ICIS news]
LONDON (ICIS)--European chemical stocks dropped on Wednesday, in line with financial markets, as a result of market uncertainty driven by Spain’s deepening debt crisis.
Banco de Espana predicted that the country’s economy would continue its fall in the third quarter of the year, with available data suggesting that GDP continued to decline at a “significant” rate for the period. Spanish GDP fell by 0.4% in the second quarter.
The country’s economic difficulties are compounded by rising borrowing costs, which rose by 25 basis points to over 6% for Spanish 10-year treasuries on Wednesday morning. 7% is seen to be the point at which government borrowing costs become unsustainable.
At 13:15 GMT, Spain’s IBEX 35 index was down 3.42%, while the Dow Jones Euro Stoxx Chemicals index fell by 1.14%. The CAC 40 in France dropped by 2.34%, while Germany’s DAX and the UK’s FTSE 100 indices were down 1.73% and 1.18% respectively.
Shares in many of Europe’s largest chemical companies were also down, with Swiss specialty chemicals company Clariant trading 2.38% lower per share, Belgian chemicals and plastics group Solvay shares were down 2.72% apiece, and British speciality chemicals company Johnson Matthey was trading down 1.95% per share.
The news comes a day before the Spanish government is expected to unveil new austerity measures in its 2013 draft budget, which has led to mass protests breaking out in the capital city of Madrid.
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