Europe shares fell on Wednesday as the Standard & Poor’s lowered Italy’s rating to BBB’ , because of the predicted weakening of the economic prospects .
The EuroStoxx 50 dropped 0.27% to 2,657.00, while the French CAC 40 lost 0.16% to 3,844.60. The UK FTSE 100 gained 0.10% to 6,519.30, while in Germany the DAX index fell 0.19% to 8,042.50.
With predictions of the Italian economy heading towards another quarter of high unemployment and contraction, the Prime Minister Enrico Letta suspended a property tax payment.
“The rating action reflects our view of a further worsening of Italy’s economic prospects coming on top of a decade of real growth averaging minus 0.04 percent,” S&P said. “The low growth stems in large part from rigidities in Italy’s labor and product markets.”
Italy’s Gross Domestic Product (GDP) is predicted to edge down from its previous estimated fall of 1.4% to 1.9%, according to S&P.
Meanwhile, the International Monetary Fund (IMF) lowered its prediction for the global growth from 3.3% to 3.1, and changed its outlook for Europe prediction of 0.4% to 0.6%, according to reports released.
In Germany, the Consumer prices rose by 0.1% in June, with continuous rising every month since May when it rose 0.4%. Annually the prices increased by 1.8%, according to reports released by the Federal Statistical Office.
In France, the industrial production fell by 0.4% month-to-month since May, compared to previous month’s growth of 2.2%, according to the National Institute for Statistics and Economic Studies.
With Italy still struggling with the economy, Italy’s industrial production rose by 0.1% in May, according to data from the National Institute for Statistics.
Italy is expected to auction the treasury bills with a target of 9.5 billion euros.
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