European stocks turn lower amid Spain worries; DAX down 0.03%

Investing.com - European stock markets turned lower on Monday, as fears over the worsening of Spain’s financial troubles intensified after the country said it entered a recession in the first quarter, while markets eyed U.S. data to be released later in the day.

During European afternoon trade, the EURO STOXX 50 dropped 0.83%, France’s CAC 40 retreated 0.89%, while Germany’s DAX 30 eased 0.03%.

Concerns over the economic outlook for Spain re-remerged after official data confirmed that the country’s economy entered a recession in the first quarter, with gross domestic product contracting by 0.3% in the three months to March and 0.4% year-on-year.

Market reaction remained muted as the figures were slightly better than estimates released by the Bank of Spain last week for a 0.4% contraction in the first quarter and a 0.5% contraction on the year.

The data came as ratings agency Standard & Poor’s announced widespread credit ratings downgrades on Spain’s troubled banking sector, following a two notch downgrade of the country’s sovereign credit rating last week.

Meanwhile, investors also remained cautious after Friday’s weaker-than-forecast first quarter growth data added to speculation that the Federal Reserve may implement a third round of easing measures.

Financial stocks were mixed as shares in Dutch lender ING Group climbed 0.56% and France’s Societe Generale rose 0.39%, while BNP Paribas and Deutsche Bank declined 0.43% and 0.60% respectively.

On the upside, Adidas saw shares surge 5.33% after the world’s second-largest sporting-goods maker reported a 38% jump in net income to EUR289 million in the first quarter, fueled by golf sales and growth in China. The company also forecast a 12% to 17% increase in full-year profit, compared with a previous prediction of 10% to 15% growth.

Elsewhere, Telenor ASA tumbled 1.08% as the company said it may have to exit India, the world’s second- largest mobile market, after the country’s telecommunications regulator proposed an 11-fold increase in license fees.

In London, commodity-heavy FTSE 100 fell 0.42%, weighed by losses in mining and energy stocks.

Shares in Rio Tinto retreated 0.23%, while copper producers Xstrata and Kazakhmys dropped 0.77% and 0.80% respectively.

BP shares tumbled 0.90% following reports that lawyers for some of the oil company’s shareholders were trying to revive a stalled lawsuit filed in an Alaska court in the aftermath of the Deepwater Horizon disaster in the Gulf of Mexico.

Adding to losses, Aquarius Platinum Ltd. sank 11.39% as the fourth-largest platinum producer reported a 7% drop in attributable output for the third quarter. The company also suspended the Siphumelele shaft and the M5 project at its Marikana operations in South Africa because of low local-currency prices for its metals.

Meanwhile, financial stocks were mixed. Lloyds Banking jumped 1.35% and the Royal Bank of Scotland added 0.90%, while HSBC Holdings and Barclays lost 0.25% and 0.48% respectively.

In the U.S., equity markets pointed to a moderately lower open. The Dow Jones Industrial Average futures pointed to loss of 0.05%, S&P 500 futures signaled a 0.15% decline, while the Nasdaq 100 futures indicated a 0.18% fall.

Also Monday, official data showed that consumer price inflation in the euro zone remained unchanged at 2.6% in April, but was higher than forecasts for a reading of 2.5%, dampening expectations for a rate cut by the European Central Bank.

Later in the day, the U.S. was to publish official data on core personal consumption expenditures price inflation and personal spending, as well as a report on business activity in Chicago.