European markets fall on U.S. budget talks deadline concerns

U.S. failure to reach accord will generate spending cuts

European markets fall on U.S. budget talks deadline concerns

Milan, December 28 - Markets fell across Europe on Friday, paced by Milan’s FTSE MIB index, amid investor concern about the possibility US lawmakers may fail to reach a budget agreement by the end of the year, setting in motion as much some $600 billion in spending cuts and tax increases. President Barack, who returned early from his family vacation in Hawaii Thursday to resume negotiations, is set to meet with Democratic and Republican leaders to negotiate a way out of the budget talks stalemate. Failing to reach an agreement on the budget by the year-end deadline could trigger negative fallout such as repercussions on the U.S. credit rating and also possibly cause a recession, analysts have said. Italy's FTSE MIB index fell 0.8% to 16,723 points. The Italian benchmark FTSE MIB stock market rose 8.3% during the course of 2012, whilst the FTSE All Share Index gained 8.7% in the period. Only one company, luxury garment-maker Cucinelli, carried out an initial public offering this year on the Italian exchange, whilst the total number of public traded companies declined to 323 as a result of 13 delistings. The yield spread between 10-year Italian bonds and the German benchmark bonds, a barometer of Italy's borrowing costs in the eurozone crisis, closed down at 318 points with 10-year yields at 4.5%. A year ago, the spread was 525 points and 10-year yields were at about 7%. The Frankfurt Dax bourse dropped 0.6% to 7,612 points, while the Paris Cac 40 Index declined 1.5% to 3,620 points. Madrid's Ibex index fell 1.8 % to 8,131 points. London's FTSE-100 stock market dropped 0.5% to 5,925 points.

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