Investing.com - European stocks closed solidly lower Thursday, after data showed the euro zone’s economy contracted in the third quarter, tipping the region into its second recession since the 2008 financial crisis.
At the close of European trade, the EURO STOXX 50 fell 0.45%, France’s CAC 40 gave back 0.52%, while Germany’s DAX 30 dropped 0.82%.
Official data released earlier indicated the euro zone’s economy shrank 0.1% in the third quarter, following a contraction of 0.2% in the preceding quarter. A technical recession is defined as two straight quarters of contraction.
Year-on-year, euro zone gross domestic product fell 0.6% compared to a year earlier after contracting at a rate of 0.5% in the previous quarter.
The data came after reports showed that the pace of Germany's economic growth slowed to 0.2% in the third quarter from a 0.3% increase in the previous quarter, while France's economy’s expanded 0.2%, following contraction of 0.1% in the previous quarter.
Data also showed Spain's economy contracted 0.3%, while Italy’s economy shrank 0.2% in the third quarter.
Concerns over the health of triple-AAA Austria and the Netherlands intensified after data showed Austria’s economy shrank 0.1% in the three months to September, while the Dutch economy contracted by an alarming 1.1%. Economists had only expected a decline of 0.2%.
Investors also remained concerned over the looming “fiscal cliff” in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.
There are fears the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise before then.
Meanwhile, in corporate news, Swedish clothing retailer H&M dropped 3.8% after reporting a 5.5% drop in same-store sales in October.
Elsewhere, in London, commodity-heavy FTSE 100 slid 0.65%, weighed by losses in oil and mining stocks.
Oil giant British Petroleum shed 0.65% after company said it was in talks with the U.S. Department of Justice and the Securities and Exchange Commission about resolving criminal charges stemming from the explosion of the Macondo well in the Gulf of Mexico in 2010.
Miners Anglo American and BHP Billiton declined 1.6% and 0.75% respectively.
In the U.S., equity markets followed lower with. the Dow Jones Industrial Average down 0.49%, S&P 500 off by 0.39%, while the Nasdaq 100 plunged 0.66% in midsession trade.
Investors are awaiting the U.S. TIC long term purchases and industrial production on Friday.