GLOBAL MARKETS-Shares, euro slip as euro zone recession deepens

Thu Feb 14, 2013 12:27pm EST

* German GDP drop worst since 2009, France's also contracts
    * U.S., European indexes pare losses to trade near
break-even
    * U.S. Treasury debt rises on safe-haven appeal
    * U.S. crude rebounds on U.S. unemployment claims


    By Herbert Lash
    NEW YORK, Feb 14 (Reuters) - European stock markets were
lower and the euro slid against the dollar on Thursday after
data showed the euro zone slipped deeper into recession in late
2012 than had been expected.
    But U.S. jobless data and a $23.2 billion bid in cash by
Warren Buffett's Berkshire Hathaway and private equity
firm 3G Capital for ketchup and baby food maker H.J. Heinz
 helped turn sentiment and trim equity losses.
    The euro tumbled to a three-week low against the dollar and
plunged against the yen after data on gross domestic product
painted a dismal picture of the euro zone's economy.
 
    Economic output in the 17-country region fell by 0.6 percent
in the fourth quarter, EU statistics office Eurostat said, while
   Germany contracted by 0.6 percent, marking its worst
performance since the global financial crisis was raging in
2009. 
    The downturn marked the currency bloc's first full year in
which no quarter produced growth, extending back to 1995. For
the year as a whole, GDP fell by 0.5 percent.
    Germany is expected to rebound but the figures suggest the
bloc as a whole could remain in recession in the first quarter
of this year, despite a recent jump in market sentiment as fears
that the currency bloc could fall apart have faded.
    "The market has weakened because of the GDP numbers," said
Barclays commodities analyst Miswin Mahesh. "It's been a macro
sell-off this morning with the GDP numbers coming out rather
than any fundamental move in itself. Most asset classes have
sold."
    MSCI's all-country world equity index fell
0.2 percent to 355.99.
    The Dow Jones industrial average was down 11.04
points, or 0.08 percent, at 13,971.87. The Standard & Poor's 500
Index was up 0.26 point, or 0.02 percent, at 1,520.59.
The Nasdaq Composite Index was up 1.14 points, or 0.04
percent, at 3,198.02. 
    Berkshire and the private equity firm will pay $72.50 a
share for Heinz, a 19 percent premium to its all-time high.
Investors said the deal bodes well for equities, even with the
benchmark S&P 500 trading at five-year highs.
    "The only reason a company buys another company is because
they see an upside. Even though we are at multiyear highs, this
kind of activity shows that there is more room for a rally,
feeding optimism to the market," said Randy Frederick, director
of trading and derivatives at Charles Schwab.
    "The jobless claims numbers were solid, and with the
European market closing, the news out of Europe is pretty much
done for the day."
    Initial claims for state jobless aid dropped 27,000 to a
seasonally adjusted 341,000, the Labor Department said, better
than markets had expected. 
    In Europe, the FTSEurofirst 300 index of top
companies slipped 0.17 percent to close at 1163.59.     
    The yen rallied to session highs versus the dollar as
investors pared bearish bets on the Japanese currency. The
dollar fell as low as 92.92 yen and last traded at 93.12,
down 0.27 percent on the day.
    The euro fell 0.86 percent to $1.3338. 
    Oil prices initially fell after euro zone figures curbed
expectations of accelerating global growth and higher energy
demand. The stronger-than-expected drop in U.S. jobless claims
last week helped lift U.S. crude markets, and Brent rebounded to
trade slightly above break-even.
    Brent crude oil rose 13 cents to $118.01 a barrel.
April Brent futures became the front-month contract on Thursday.
U.S. crude rose 49 cents to $97.50.
    U.S. Treasuries yields edged back from 10-month highs on the
euro zone data, helping boost demand for safe-haven debt.
    The benchmark 10-year U.S. Treasury note was up
6/32 in price to yield 2.0347 percent.
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