Stock markets tumbled in Milan, Paris, Frankfurt and London today as members of the euro zone struggled over a proposed joint bond offering that would aid weaker members of the currency bloc, but spread around the economic pain.
Investors also worried over a weak offering of German debt and signs of a manufacturing slowdown in China.
The FTSE MIB in Milan led the downward spiral, falling 2.6 percent to 13,915.78 followed by the CAC 40 in Paris, which fell 1.7 percent to 2.822.43. The DAX in Frankfurt tumbled 1.4 percent to 5,457.77 while the FTSE 100 in London sank 1.3 percent to 5,139.78.
Among those losing ground were Burberry Group, which declined 4.5 percent to 11.33 pounds; Safilo Group, which fell 4.1 percent to 4.58 euros; and French Connection, which slid 11 percent to 0.49 pounds. The euro slipped 1.1 percent against the U.S. dollar to $1.34 while the pound fell 0.7 percent to $1.55.
European Commission president Jose Manuel Barroso proposed the creation of a Euro bond, or “stability bond,” aimed at helping weaker member states cope with their debt loads.
The Germans, whose government bond yields remain low, are not in favor of the proposal.
“Stability bonds will not solve our immediate problems and cannot replace the reforms that are needed in countries currently under pressure,” Barroso said Wednesday, according to the BBC.
“But it is also important to show to public opinion and to international investors that we are serious about stronger governance in the Euro area, both in discipline and in convergence, and stability bonds are exactly an example of that.”
Wall Street followed Europe’s lead and the S&P Retail Index was down 1.1 percent, or 5.76 points, to 508.97 in middday trading. The Dow Jones Industrial Average was off 1.6 percent, or 182.73 points, to 11,310.99.
The decliners included Sears Holdings Corp., down 3.2 percent to $60.25; Ann Inc., 2.3 percent to $22.45, and Limited Brands Inc., 1.9 percent to $39.20.
The Commerce Department said October personal consumption expenditures rose 0.1 percent, or $8.2 billion, versus the prior month, when spending increased a much swifter 0.7 percent. Economists projected a stronger 0.4 percent gain for October.
On the plus side, personal income increased by 0.4 percent or $48.1 billion — the biggest jump since March.
And the Thomson Reuters/University of Michigan Surveys of Consumers reported that consumer sentiment has perked up some. The Index of Consumer Sentiment rose to 64.1 this month from 60.9 last month.