European Markets Dropped On Weak UK GDP & Profit Taking

(RTTNews) - The European markets finished solidly to the downside Tuesday after British GDP came in weaker than anticipated. Profit taking also played a role in the pull back, after the earnings fueled gains of the previous session. The weakness accelerated in the afternoon, following reports that a U.S. cargo vessel was seized by Iran. However, the markets stabilized after American officials denied the report.

A solution to the situation in Greece begins to appear more likely. The Greek government rearrange its negotiating team yesterday and Prime Minister Alexis Tsipras stated today that he expects to reach a deal with international creditors by May 9.

The European Central Bank is not preparing for an exit of Greece from the euro area, but aiming to strengthen the bonds with the new government, ECB Executive Board member Benoit Coeure said.

In the transcript on an interview to the French Magazine Alternatives Economiques, published on the ECB website on Tuesday, Coeure said, "The exit of Greece is not a scenario we are working on."

He also said that all the efforts being made at the moment were aimed at strengthening the relationship with Greece, given the new priorities of the government, in a context that remains that of the euro area and which involves rights but also the duty to respect common rules.

The move to reshuffle the Greek team that conducts negotiations with creditors will help the situation, but the government must decide on serious reforms to make progress in talks, Bank of France Governor Christian Noyer said Tuesday.

In an interview to Europe 1 radio, Noyer said the government's move to reduce the role of the Greek Finance Minister Yanis Varoufakis in the negotiating team "does not change the substance at all".

He said the Greek government must decide to undertake serious reforms to put the talks back on track.

The Euro Stoxx 50 index of eurozone bluechip stocks decreased by 1.62 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 1.45 percent.

The DAX of Germany dropped by 1.89 percent and the CAC 40 of France fell by 1.81 percent. The FTSE of the U.K. declined by 1.27 percent and the SMI of Switzerland finished lower by 0.96 percent.

In Frankfurt, Commerzbank AG dropped by 5.69 percent on equity dilution worries. After posting better-than-expected preliminary profit for the first quarter, the lender said it has placed about 113.85 million new shares with institutional investors by way of a so-called accelerated book-building process. Deutsche Bank also decreased by 3.78 percent.

Luxury car giant Daimler is fell by 0.69 percent, after its first-quarter net profit nearly doubled compared to a year earlier.

In Paris, GDF Suez declined by 1.00 percent. The power utility confirmed its 2015 financial targets despite reporting a 10 percent fall in first-quarter core profit.

Telecom major Orange tumbled by 4.67 percent, after reporting Q1 results that came in largely in line with expectations.

Total climbed by 1.04 percent and UK-based oil giant BP dipped by 0.17 percent after both companies reported higher than expected profits.

In London, Standard Chartered decreased by 3.18 percent, after reporting a 22 percent fall in first-quarter pre-tax profit.

Whitbread fell by 2.57 percent, after the announcement that CEO Andy Harrison will retire by February 2016.

The British economy expanded at the slowest pace since 2012, reflecting contraction in construction and industrial activity, preliminary estimate published by the Office for National Statistics revealed Tuesday.

Gross domestic product expanded 0.3 percent sequentially during the January to March period, the slowest growth since the fourth quarter of 2012. The growth rate was forecast to slow marginally to 0.5 percent from the 0.6 percent logged in the fourth quarter of 2014.

Loans approved for house purchase in the U.K. rose to the highest level in six months during March, data from the British Bankers' Association showed Tuesday. The number of loans approved for house purchase climbed to 38,751 from 37,453 in March. Economists had expected an increase in the figure to 38,700.

French consumer confidence strengthened to its highest level since January 2010, survey data from the statistical office Insee revealed Tuesday. The consumer confidence index rose to 94 in April, the highest level since January 2010, from 93 in March. The reading came in line with expectations.

French unemployment rose to a record high in March, data released by the labor ministry revealed late Monday. The number of unemployed increased 15,400 or 0.4 percent from February to 3.51 million in March.

Annual growth in home prices in major U.S. metropolitan areas accelerated by more than expected in the month of February, according to a report released by Standard & Poor's on Tuesday. The report said the S&P/Case-Shiller 20-City Composite Home Price Index jumped 5.0 percent year-over-year in February compared to a downwardly revised 4.5 percent increase in January.

Economists had expected the annual rate of growth to accelerate to 4.7 percent from the 4.6 percent originally reported for the previous month.

After reporting a significant rebound in U.S. consumer confidence in the previous month, the Conference Board released a report on Tuesday showing that its consumer confidence index unexpectedly pulled back sharply in the month of April.

The Conference Board said its consumer confidence index tumbled to 95.2 in April from an upwardly revised 101.4 in March. The steep drop came as a surprise to economists, who had expected the consumer confidence index to climb to a reading of 102.5.