Milan, other European markets drop in Wednesday trading

Investors spooked by Japanese, European economies

Milan, other European markets drop in Wednesday trading

Milan, June 5 - Milan's leading financial market joined its European counterparts Wednesday in closing lower, following trends in Japan. The FTSE-Mib fell by 0.96%, dropping to 16,971 points as investors watched a free fall on Japan's Nikkei 225, which shed a staggering 3.8% in value. Investors seemed to reject the tone and content of a speech by Prime Minister Shinzo Abe on Japan's growth strategy. The Nikkei is now down 17% from its May 22 peak. Markets were also concerned about weakness in the European economy. Euro-area GDP fell 0.2% last quarter, the European Union's statistics office said, confirming an estimate released on May 15. Investors also debated the possibility the European Central Bank on Thursday might again reduce its policy rates, already at historic lows, to further stimulate the struggling European economy. Meanwhile, the spread between Italy's 10-year bond and its German counterpart closed at 262 basis points, slightly higher than Tuesday's close of 256 basis points. The yield on Italian 10-year paper closed at 4.13%. The spread between lending rates in the two countries is seen as an indication of investor faith in the Italian economy and its ability to cope with a lingering recession. On other European markets, Frankfurt's DAX fell by 1.20%, closing at 8,196.18 points, while Paris's CAC 40 fell by 1.87%, closing at 3,852.44 points, and Spain's IBEX 35 shed 0.86% to close at 8,290.70 points. London's FTSE 100 fell by 2.12% to end trading at 6,419.31.

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