Europe

11/03/2010

February proved another rocky month for equity markets, with mixed success for eurozone equities. Share prices slumped initially as fears over Greece’s fiscal stability broadened out to include a number of other peripheral eurozone members, including Spain and Portugal. However, by mid-month, concerns about the potential for a default within the region eased somewhat and markets staged a modest rally, before uncertainty crept in once more leaving equities slightly down for the month as a whole. Consumer staples and healthcare stocks managed to nudge their way into positive territory; while consumer discretionary, financials and energy stocks posted some of the biggest losses. In economic news, preliminary estimates showed that eurozone growth slowed markedly in the final quarter of 2009 to just 0.1% from 0.4% in Q3 2009. In addition, the German IFO Business Climate Index was disappointing in February, falling from 95.8 to 95.2, indicating a less favourable outlook amongst companies. Manufacturing data was firmer than expected, but services data disappointed. The European Central Bank (ECB) left policy rates on hold at 1% – as the market expected – in a continued attempt to stimulate growth.