US shares spread betting markets fell this afternoon after a senior German government official said Berlin is increasingly pessimistic that tomorrow's EU summit will hammer out a plan to combat the Eurozone debt crisis.
By 4pm (London time) the S&P 500 was 0.73% lower at 1249.33, while the Dow was 0.39% down to 12,102.82. In London, the FTSE 100 erased its morning gains and was 0.82% lower at 5522.87.
German official turns market sentiment
Stock market indices erased early morning gains after a senior German official dampened optimism that European leaders will take decisive steps to contain the region's debt crisis at the two-day EU summit due to start tomorrow.
The anonymous official said that Berlin is increasingly pessimistic about the chances of a deal being struck to solve the debt crisis as some governments do not comprehend the severity of the situation.
Meanwhile, French president Nicolas Sarkozy showed his determination to lay out a plan, saying that the French will not leave the table until a powerful deal is reached.
US Treasury secretary Timothy Geithner supported Mr Sarkozy and voiced his support and confidence in the Franco-German plan.
During the EU summit, Eurozone leaders will be under pressure to make progress towards fiscal integration and more stringent budgetary discipline, which could open the way for the ECB to take a greater role in stabilising Eurozone bond markets.
However, investors will also keep their ears to the ground for any mention of possible initiatives to increase the firepower of the rescue funds.
In the meantime, ahead of the 'make it or break it' summit, Eurozone central bankers are looking at the possibility of a shock in the currency area that could lead to a partial break-up of the system.
IATA lowers industry revenue forecast
The main representative body for airlines, the International Air Transport Association (IATA), announced this morning that it had cut its collective net earnings forecast for the industry in 2012. This forecast fell from $4.9 billion to $3.5 billion, bracing airlines for a steeper than expected fall in profitability.
IATA said the forecast was the best case scenario and blamed the downward revision on the Eurozone debt crisis. The organisation warned that in the worst case scenario, airlines could report combined net losses of $8.3 billion.
IATA did however maintain its forecast for carriers to record a collective net profit of $6.9 billion this year, down from $15.8 billion the previous year, but lowered its forecast for European airlines.
It now expects European airlines to report earnings of $1 billion in 2011, down from a previous forecast of $1.4 billion. For 2012, the IATA says European carriers would fare the worst, with losses of $4.4 billion, while even the most optimistic forecast would see European airlines report a loss of $600 million.
The company warned that the biggest risk facing the airline industry's profitability over the next year is the ongoing economic turmoil.
Stagecoach profit derails
Stagecoach's first-half pre-tax profit slipped by 18% to £90 million, while operating profit slipped to £6.9 million from £22.9 million last year, with the company blaming the decline on its UK rail division.
Stagecoach also announced today that its East Midlands rail franchise has held back its first-half pre-tax profit.
The firm does however remains optimistic that the division will return to profitability next year when government subsidies for the franchise are booked, and also reiterated that the group was on track to deliver stronger earnings in the second half.
The slip in profit came as Stagecoach also focused on the North American budget coach market, with a £44 million investment in 100 new vehicles for its Megabus division. Stagecoach shares rose over 5% by late afternoon to 262.70p.
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'Pessimism Over EU Fiscal Summit Outcome Pushes Spread Betting Markets Down', Article by IG Index, last update: 7-Dec-11
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