Investor sentiment shifted for the worse in Europe Wednesday, where euro zone anxiety reemerged and protestors clashed with police over government cutbacks.
Madrid’s IBEX 35 fell 3.9 percent to 7,854.40 as Milan’s FTSE MIB declined 3.3 percent to 15,408.03 and Paris’ CAC 40 dropped 2.8 percent to 3,414.84. Frankfurt’s DAX sank 2 percent to 7,276.51 and London’s FTSE 100 retreated 1.6 percent to 5,768.09.
Wall Street posted smaller declines. The S&P Retail Index fell 0.4 percent, or 2.31 points, to 651.07, as the Dow Jones Industrial Average retreated 0.3 percent, or 44.04 points, to 13,413.51.
Europe is on the verge of what could be a tense autumn. Demonstrators in Spain took to the streets Tuesday to protest the 2012 budget, which will be unveiled later this week. Police fired rubber bullets at protesters. Thirty-eight people were arrested and 64 were injured.
On Wednesday, the Bank of Spain said the country’s economy continued to shrink at a “significant” rate in the third quarter while unemployment is at its highest rate since the Seventies.
Greek trade unions also staged a 24-hour general strike Wednesday — the first since the new government took office in June — to protest spending cuts of $15 billion. Police fired tear gas and clashed with anarchists who had thrown petrol bombs near the parliament in Athens.
Retail and luxury stocks sank along with the markets. The day’s biggest decliners included Carrefour, down 5.6 percent to 16.42 euros; Yoox, 4.5 percent to 9.96 euros; Geox, 3.8 percent to 2.16 euros, and Mulberry Group, 6.9 percent to 11.64 pounds.
The euro traded at $1.29 against the dollar while the pound traded at $1.62.
Wall Street’s fashion decliners included Tumi Holdings Inc., down 4.4 percent to $23.04; The Bon-Ton Stores Inc., 3.8 percent to $9.56; American Eagle Outfitters Inc., 2.2 percent to $20.79, and Dillard’s Inc., 1.7 percent to $72.94.