European stocks fell over 1% on Thursday, reversing a two-session recovery. Bleak US data on factory orders and jobs rekindled recession fears. Investors remain cautious about the fate of Washington’s rescue plan for the US financial sector.
Nationwide Chief Economist Fionnuala Earley said even if it passes into law, there are no guarantees: “What is happening in the States could be the trigger that starts to introduce more certainty into worldwide markets, so it might mean that we don’t need anything in the UK or in Europe as a whole, I think we still need to wait to see what happens there.”
Banks gained, but mining and industrial stocks took a beating, with ArcelorMittal sinking 9.3%, Rio Tinto dropping 7.9% and Siemens losing 4.6%. The dollar is strong, hitting a 13-month high against the euro, the more robust US currency helped pull down the price of oil sharply.