World Bulletin / News Desk
German business sentiment fell for a second straight month in June to its lowest level in over two years, in the latest sign Europe's largest economy is beginning to feel the pain from the euro zone debt crisis.
The Munich-based Ifo think tank said on Friday its business climate index, based on a monthly survey of some 7,000 companies, dropped to 105.3 in June from 106.9 in May.
This was the lowest level since March 2010 and slightly worse than expected, with a Reuters poll of 44 economists forecasting the index would fall to 105.9.
"The euro crisis is really hitting home," Klaus Wohlrabe, an Ifo economist, told Reuters. "It's right on the front doorstep."
The Ifo data add to concerns that Germany's economy is losing stamina and may have contracted in the second quarter after it steamed ahead in the first three months of the year, helping the euro zone avoid recession by growing 0.5 percent.
Other recent data have also pointed to a slowdown. Manufacturing activity is at its weakest level in three years, according a purchasing managers' survey published on Thursday.
Imports tumbled at their fastest rate in two years in April, while exports have declined on weakening demand from within the euro zone, where Germany sends roughly 40 percent of its goods sold abroad.
Firms were more optimistic about current business conditions but a sub-index on business expectations fell to 97.3 from a revised 100.8 in May.
The biggest decline in the June Ifo data was in manufacturing, a sector that has driven German growth over the past year.
The figures were released hours before German Chancellor Angela Merkel travels to Rome to meet with her Italian, Spanish and French counterparts to discuss solutions to the euro zone's sovereign debt crisis.
A significant weakening of the German economy, which has so far remained largely immune to the crisis hitting southern economies like Greece, Italy, Spain and Portugal, could encourage Berlin to take bolder steps.
"The German ship is more solid than all other euro zone ships but latest indicators have been good reminders that even the most solid ship can capsize in a rough thunderstorm," said ING's Carsten Brzeski.
"Maybe there is one upside to the latest batch of disappointing data from the euro zone's biggest economy: it shows that a fundamental solution to the euro zone crisis is also in the interest of the German economy."
Volatility eased as traders focused on the world economy and corporate earnings after a week dominated by the dramatic spike in tensions over North Korea, which triggered a global sell-off before prices bounced back Monday.
Investors greeted the more conciliatory tone after US stocks dropped three days in a row last week on President Donald Trump's vow of "fire and fury" if North Korea continued to pursue its nuclear weapons and ballistic missile programs.
The ultra-conservative kingdom has moved to diversify its traditionally oil-dependent economy following a sharp fall in crude prices.
In its monthly report on the global oil market, the International Energy Agency said, however, that it believes the supply glut is easing, partly because demand is growing faster.
US stocks have been in retreat since President Donald Trump Tuesday issued a fiery warning to North Korea to halt its nuclear program.
The move by one of Japan's best-known firms greatly reduces the chance of an embarrassing delisting from the Tokyo Stock Exchange (TSE).
London's benchmark FTSE 100 index weakened by 0.5 percent to 7,503.39 points.
The approval by the European Commission comes just over two months after the European Central Bank -- which took on the role of the eurozone's banking supervisor in 2014 -- allowed the sale to go ahead for a symbolic fee of one euro.
BP, Chevron, ExxonMobil, Shell and Total have all published results in recent days, showing they pocketed $23 billion in net profit in the first half fo the year.
Higher cereal, sugar and dairy prices pushed food price index by 10.2 percent annually in July
HSBC was also a big riser, gaining three percent at £7.65 ($10, 8.5 euros) in late morning trade after the British banking giant announced a share buyback plan alongside a rise in first-half profits.
Both main crude contracts made strong gains, with WTI testing $50 a barrel for the first time since late May and Brent heading towards $53, while mining giants BHP Billiton and Rio Tinto saw their share price rise as commodities strengthened.