The mood could be better on the stock exchanges in Europe in Friday's trading, where investors have pushed optimism to the side. Instead, the focus is on the major challenges that policymakers are struggling with on both sides of the Atlantic.
In Europe the debt crisis continue to pull down, while Americans' concerns is whether Democrats and Republicans can agree in due time before the fiscal tightening with the entrance to 2013.
It's probably still more about the U.S. than anything else, referring to the tax increases and budget cuts, which will take effect from the beginning of the year, which is feared to lower an already fragile economic recovery. The whole situation surrounding the fiscal gap is the critical issue right now and will remain so in the near future.
The rating agency Fitch believes that the U.S. economy will shrink if the politicians do not change the planned tax increases and budget cuts, which total is in excess of 600 million dollar.
"We think it will send the U.S. back into recession," said Ed Parner, director of Fitch Ratings, Thursday to Bloomberg News, adding that it will be a totally inevitable, but also completely unnecessary recession.
While the British and French stock market drop with decreases of 0.8 and 0.7 percent, the German shares take a hard hit with a fall in the benchmark DAX 30-index of 1.6 percent. Particularly large banks Commerzbank and Deutsche Bank weigh tremendously in the overall picture with decline of 5.9 and 4.9 percent.
Credit Agricole feels even more investor pessimism. The French major bank performed with a loss for the third quarter of 2.85 billion euro clearly worse than feared by analysts, and the stock is punished by a decrease of nearly 7 percent. According to Bloomberg, the market had expected a loss of 1.88 billion euro.
It is especially Credit Agricole's decision to sell Emporiki Bank to Greece Alpha Bank, which weighed in the financial statements, with a negative impact from the sale of 1.96 billion euro.
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