European Markets Declined Further As Emerging Market Concerns Remain

(RTTNews) - The European markets finished in the red again Monday, adding to Friday's sharp losses. Investor concerns over emerging markets persisted at the start of the new trading week, leading to continued risk aversion. Some weak corporate earnings results and an output warning from BG Group added to the negative mood. The better-than-expected German business confidence data did little to boost investor sentiment.

Germany's Bundesbank on Monday said that financially stressed countries should consider a one-off levy on private assets. Such a levy on private wealth corresponds to the principal of national responsibility, under which taxpayers are also responsible for the liabilities of the government before the solidarity of other states is required, the bank said in its monthly report.

However, a one-off levy carries huge risks and hence, its implementation would not be easy, the bank warned. It also said that the levy should be used only in absolutely exceptional cases, such as when a country is about to go bankrupt.

Moody's Investors Service maintained the 'negative' outlook on the French sovereign ratings, citing the continued reduction in the competitiveness of the economy as well as the risk of a further deterioration in government financial strength. Nonetheless, the agency confirmed 'Aa1' government bond rating, a notch below the top level.

European Central Bank President Mario Draghi said on Friday that euro area recovery is gradually taking place and there is no threat of deflation in the region.

Speaking at the 44th World Economic Forum Annual Meeting in Davos, Switzerland, Draghi said, "The recovery is gradually taking place but the risks are to the downside."

The ECB's very accommodative monetary policy is being passed into the real economy, he said.

Growth remains weak, fragile and uneven despite booming stock markets and a shift in recovery from exports to consumption, the ECB chief noted. Unemployment has stabilized but remains very high, he added. He also sought a change in laws in many countries to tackle youth unemployment.

Bank of England policymaker Martin Weale said reducing the central bank's unemployment rate threshold of 7 percent to 6.5 percent may not achieve the purpose of forward guidance as that level could also be quickly overtaken by events, a regional British daily reported on Friday.

"I do not feel terribly enthusiastic about a reduction from 7 percent to 6.5 percent," Weale said in an interview to the East Anglian Daily Times. "The purpose of Forward Guidance was to create greater certainty."

Weale expects interest rates to remain low for sometime, even after a steep fall in unemployment. In its Forward Guidance announced in August, the central bank said the Monetary Policy Committee will not hike the record low 0.50 percent interest rate until unemployment comes down to 7 percent.

The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.32 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.87 percent.

The DAX of Germany dropped by 0.46 percent and the CAC 40 of France dipped by 0.41 percent. The FTSE 100 of the U.K. tumbled by 3.29 percent and the SMI of Switzerland fell by 0.85 percent.

In Frankfurt, Lanxess surged by 8.22 percent. The specialty chemicals firm appointed Merck KGaA's finance chief Matthias Zachert as its new chief executive. Merck KGaA's plunged by 10.13 percent.

Merck KgaA also received broker downgrades while Lanxess received a broker upgrade.

Gagfah decreased by 1.15 percent. The stock was downgraded to ''Neutral'' from ''Buy.''

In London, Vodafone declined by 4.45 percent, after AT&T said it does not plan to make an offer for the UK-based telecom firm.

Specialist retail financial services provider Albemarle & Bond Holdings plummeted by 58.44 percent, after deciding to terminate formal sale process.

Pearson fell by 3.84 percent, after JP Morgan downgraded it to "Neutral" from "Overweight."

BG Group plunged by 16.45 percent. The oil and gas explorer issued Force Majeure notices under its LNG agreements in Egypt, reflecting the diversions of gas volumes to the domestic market in excess of the existing pooling arrangements. The company also cut its production guidance for 2015.

EasyJet dropped by 2.34 percent, after HSBC downgraded it to "Underweight" from "Neutral."

U.S. cable group Liberty Global, which has a 28.5 percent stake in Ziggo NV, has agreed to acquire the remaining stake in the Dutch broadband provider in a stock and cash deal that values the firm at about 10 billion euros. Ziggo fell by 2.86 percent in Amsterdam.

Ericsson increased by 2.33 percent in Stockholm. The firm has reached an agreement with South Korean conglomerate Samsung Electronics Co. Ltd. on global patent licenses.

German business confidence rose more-than-expected in January, reports said Monday citing survey results from the Ifo Institute. The business confidence index climbed to 110.6 in January from 109.5 a month ago. The score was forecast to rise to 110.

New home sales in the U.S. fell by much more than anticipated in the month of December, according to a report released by the Commerce Department on Monday, with sales pulling back further off the five-year high set in October.

The report said new home sales tumbled 7.0 percent to an annual rate of 414,000 in December from the revised November rate of 445,000. Economists had expected sales to dip to 455,000 from the 464,000 originally reported for the previous month.