Milan, most other European markets drop

Italian equities pulled down by gloomy reports on sluggish GDP

Milan, most other European markets drop

Milan, June 10 - Concerns over the outlook for the Italian economy pulled Milan's leading financial market down on Monday. The FTSE Mib fell by 0.81%, dropping to 16,556 points as investors fretted over new reports showing that Italy's gross domestic product (GDP) shrank 2.4% in the first quarter of 2013 compared to the same period last year. When compared with the previous quarter, GDP in the first three months of the year fell by 0.6%, Italian statistics agency Istat announced on Monday. Istat's report shaved 0.1% from its previous estimate on May 15, when it calculated that Italy's GDP in the first quarter contracted 2.3% on an annual basis and 0.5% quarter-to-quarter. The agency said the new estimate translates into an economic contraction of 1.6% for this year compared to 2012 - if there is no further economic variation in the remaining quarters of the year. Concerns about economic growth weighed on major industrial stocks on Italy's leading stock exchange, including Fiat, which shed 4.67% of its value, and Telecom Italia, down 4.48%. Similar fears also weighed on bank stocks as investors worried about rising interest rates and the spread between Italian and German bonds. The spread between Italy's 10-year bond and its German counterpart closed at 269 basis points on Monday, the same level where it ended trading last Friday following a week of steady increases. The yield on Italian 10-year paper closed at 4.29%. 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, only Frankfurt's DAX showed any strength, gaining 0.64% and closing at 8,307.69 points, Meanwhile Paris's CAC 40 slid by 0.21%, closing at 3,863.36 points, Spain's IBEX 35 shed 0.47% to close at 8,227.40 points, and London's FTSE 100 fell by 0.18% to end trading at 6,400.45.

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