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Europe close: Stocks dip amid recession jitters

By Alexander Bueso

Date: Friday 11 Jan 2019

(Sharecast News) - Stocks on the Continent finished the session slightly lower, although a dip in the single currency helped buoy share prices even as analysts mulled the risk of technical recessions in Germany and Italy at the end of 2018.
Nevertheless, analysts at Bank of America-Merrill Lynch were somewhat hopeful, telling clients on Friday: "Hopefully, some decent traction in the US, a rebound in China combined with the domestic fiscal easing and lower oil prices (we revised our inflation forecasts for 2019 from 1.6% to 1.0%, more details in our weekly view) should allow for a re-acceleration in Europe from the end of Q2."

By the end of trading, the benchmark Stoxx 600 had eked out again of 0.09% or 0.32 points to 349.20, alongside a drop of 0.31% or 34.13 points to 10,887.46 for the German Dax and a drop of 0.51% or 24.32 points to 4,781.34 on the Cac-40.

Investors were also keeping an eye on reports that Brexit might be delayed beyond 29 March and the possibility that Greece's coalition government might break-up.

In the background meanwhile, there was also a fair bit of market chatter to be heard around the 'R' word in the States.

According to a survey conducted by Bloomberg, economists now saw a median 25% risk of a recession in the US over the next 12 months, versus 20% in December.

Elsewhere on the economic front, the latest readings on industrial production and inflation out of the euro area appeared to corroborate BofA-ML's forecasts.

Spanish industrial production shrank in November at a clip of 1.5% month-on-month (consensus: 0.2%), led by a 1.8% drop in the output of capital goods, INE said.

It was a similar story over in Italy, where the latest official data revealed that output declined by 1.6% on the month.

Meanwhile, in Greece, ELSTAT reported a drop in the annual rate of CPI from 1.1% for November to 0.6% in December.

That brought it into line with Portugal's CPI, according to a final reading published at the end of the week by the national office of statistics in Lisbon. In November, Portugal's CPI had stood at 0.9%.

For later in the day, the focus was expected to be on the release of US CPI data for December at 1330 GMT and Spain's 2019 budget at 1300 GMT.

On the corporate front meanwhile, stock in AB Inbev was ahead by 3.7% after Bloomberg reported that it might pursue a partial flotation of its Asian unit.

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