Stock markets drop as Europe strikes

Europe's main stock markets dropped on Wednesday as workers across indebted eurozone nations took part in coordinated general strikes in protest at their governments' deep austerity programmes. London's FTSE 100 index of leading companies dropped 1.11 percent to 5,722.01 points, while in Frankfurt the DAX 30 gave up 0.94 percent to 7,101.92 points and Paris' CAC 40 fell 0.89 percent to 3,400.02 points. Madrid slid 0.27 percent and Milan shed 0.52 percent. "Against a backdrop of unrest and strikes across Europe, share markets have slipped back once more as investors once again adopt a safety first approach in the absence of any positive drivers," said Michael Hewson, Senior Market Analyst at CMC Markets UK. In foreign exchange deals, the euro rose to $1.2746 from $1.2703 late in New York on Tuesday. On Tuesday, the European single currency had hit two-month low points against the dollar. Gold prices dipped to $1,725.75 an ounce in trading on the London Bullion Market on Wednesday, compared with $1,726.25 on Tuesday. Baton-wielding riot police and demonstrators clashed in central Madrid on Wednesday during a general strike that was part of a Europe-wide anti-austerity protest. Spain and Portugal witnessed the first coordinated general strike in the Iberian Peninsula, with train, bus and metro services shut down, factories idled and more than 700 flights cancelled. Those actions were backed by temporary walkouts in Italy, the third biggest eurozone economy, and Greece, which is fighting to avert default despite having approved plans for 13.5 billion euros ($17 billion) in spending cuts and tax increases. Hewson said that third quarter GDP contractions of 7.2 percent in Greece and 3.4 percent in Portugal "illustrated the economic malaise that Europe is currently buckling under," and said they did not bode well for Spanish, Italian, French, German and eurozone figures due out on Thursday. European markets were also suffering losses owing to worries about the US economic outlook. Following last week's re-election of President Barack Obama, traders fear a stand-off in Congress in addressing the fiscal cliff of tax hikes and spending cuts that are due to take effect on January 1 unless a deal is brokered ahead of the new year. The package, drawn up during fraught spending cap talks last year, could tip the world's biggest economy back into recession. And in Germany a survey on Tuesday showed investor confidence had worsened in November as the eurozone crisis began to drag on its biggest economy. However, there was some good news for Greece with the threat of a default this week receding after it raised 4.0 billion euros in short-term bond auctions, which should help plug a financing gap left by the stalled loan. Asian shares rose Wednesday as a Greek bond sale on Tuesday eased fears of an immediate default. Sydney gained 0.20 percent, Seoul rose 0.23 percent, Hong Kong climbed 1.20 percent, and Shanghai rose 0.37 percent. Tokyo ended flat after electronics giant Panasonic said it may slash another 8,000 jobs and Toyota recalled 2.77 million vehicles over water pump or steering problems. Analyst-beating quarterly results from Cisco Systems gave US stocks a solid opening boost at the opening of trade on Wednesday. But the indices then turned down ahead of a press conference by Obama in which he is expected to detail his proposed revenue increases for trimming the huge US fiscal deficit, including possible tax hikes that could hit Wall Street. In midday trade, the Dow Jones Industrial Average was down 0.43 percent to 12,701.51 points. The broad-market S&P 500 slid 0.28 percent to 1,370.66 points, while the tech-rich Nasdaq Composite slipped 0.10 percent to 2,880.94 points. Dow component Cisco jumped 6.3 percent to $17.92 however after its 48 cents earnings per share for its fiscal first quarter beat analyst expectations by two cents.