European shares slip on euro zone recession worries
Reuters | Feb 22
The euro zone’s service sector shrank unexpectedly this month, reviving fears that the economy risks sinking into recession, a business survey showed. Markit’s Eurozone Services Purchasing Managers’ Index (PMI) fell to 49.4 from January’s 50.4, missing even the lowest forecast in a Reuters poll. Strategists said several issues remained unresolved after the Greek bailout deal. “There are still some big questions: does Greece have enough money even now after the second bailout? Can they generate the growth required?” asked Henk Potts, equity strategist at Barclays Wealth, though he noted other factors would limit the downside for equities. “In general terms, there has been a more positive feel to markets since the start of the year. The euro zone crisis has been helped by recent measures. The U.S. (economy) is gaining momentum.”
Euro-Area Manufacturing, Services Contract
Bloomberg | Feb 22
European services and manufacturing output unexpectedly shrank in February as the euro-area economy struggles to rebound from a contraction in the fourth quarter. A euro-area composite index based on a survey of purchasing managers in both industries dropped to 49.7 from 50.4 in January, London-based Markit Economics said in an initial estimate released by e-mail today. Economists had forecast a reading of 50.5, according to the median of 16 estimates in a Bloomberg News survey. A reading below 50 indicates contraction.
Euro-Zone Business Activity Shrinks Unexpectedly
The Wall Street Journal | Feb 22
“The euro zone is far from out of the economic woods and faces a hard slog to get back to sustained growth,” said Howard Archer, economist at IHS Global Insight, a forecasting group. “Indeed, the surveys reinforce our belief that it is more likely than not that the euro zone will suffer a further contraction in the first quarter of 2012 which will put it back into recession,” he said. The euro-zone economy shrank by 0.3% in the last three months of 2011. A recession is defined as two straight quarters of falling output.
Europe’s debt crisis set to dominate G20 talks
Reuters | Feb 22
Europe’s debt crisis will dominate talks between Group of 20 (G20) policymakers this weekend as the rest of the world looks for pledges that the euro zone will boost its crisis safety net. Advanced and developing nations alike are keen for reassurances that the European Union will do whatever it takes to limit fallout from the crisis and convincing answers could help officials inch closer to boosting the firepower of the International Monetary Fund (IMF) so it can better help victims.
Recession has Portugal urging citizens to leave to find work
USA Today | Feb 21
For nearly 600 years, Portugal had one of the greatest colonial empires in Europe, commanding trade centers in Africa, South America and China. Now, laid low by recession, Portugal is telling citizens to head to former colonies where Portuguese is spoken, such as Brazil and Macau, to find work. “Recent graduates should lead a new type of emigration, different from the 1960s, when Europe was the destination,” Minister for Parliamentary Affairs Miguel Relvas said recently. “In the past 20 years, Portugal has invested in a generation of people, and now we can’t give them what they need: employment.”
Greece bailout wards off Europe meltdown
AP | Feb 21
The bailout has saved Europe, for now, but it’s unlikely to save Greece. The euro130 billion ($172 billion) rescue – agreed to Tuesday after an all-night summit of European ministers – prevented an uncontrolled bankrupcty and calmed investors worried that a Greek default would have started a chain reaction across Europe. But it left key problems unresolved. Draconian budget cuts could keep Greece mired in recession after five straight years. The deal doesn’t directly address the debt problems in other struggling countries in the 17-country zone that uses the euro. Spending cuts could reduce tax revenue and possibly worsen the government’s finances. “You can’t shrink your way out of a recession,” said Mark Weisbrot, co-director of the liberal Center for Economic and Policy Research in Washington. “What they are doing to Greece really makes no economic sense.”