Thursday, November 10, 2011

Eurozone's growth has stalled, says EU

The European Union has drastically cut its growth forecast for the eurozone in 2012, from 1.8% down to just 0.5%.

"Growth has stalled in Europe and there is a risk of a new recession," said European Commissioner Olli Rehn.

The low growth makes it harder for Europe to escape its debt crisis, with Italy's position seen as unsustainable.

Italy raised 5bn euros from a new issue of bonds on Thursday, but had to pay an interest rate of 6.087% to borrow the money for one year.

The financial markets remained jittery on Thursday as worries persisted about the high cost of borrowing faced by Italy.

The Dow Jones share index opened higher in New York, regaining some of its hefty losses from Wednesday. In late afternoon trading, the FTSE 100 in London was barely changed, while the Cac 40 in Paris and the Dax in Frankfurt were both slightly higher.

Earlier in the day, Japan's Nikkei share index had fallen by 2.9%, South Korea's Kospi shed 3.8% and Hong Kong's Hang Seng index dropped 5.3%. more