(RTTNews) - European stocks may edge lower on Friday, with the International Monetary Fund's warning to advanced countries over possible default and Standard & Poor's decision to downgrade Japanese debt likely to weigh on sentiment.
The IMF in its latest report on global debts and deficits warned that advanced countries need to act to cut their deficits. "Credible plans going well beyond 2011 need to be put in place urgently to lock in benevolent market sentiment," it said.
Closer home, the most closely-watched barometer of consumer confidence revealed an "astonishing collapse" in January as the rise in the VAT sales tax rate took effect in January, according to market research group GfK NOP.
The GfK NOP Consumer Confidence Index, which gauges the mood of 2,000 Britons, fell 8 points over the month to -29 in January, the lowest level since March 2009, suggesting shoppers were being hit hard by austerity. All components of the indicator dropped in the month, with the biggest fall seen in the climate for major purchases, down 22 points to -29.
Meanwhile, Ireland's lower house of parliament, the Dail, narrowly passed a key finance bill, an important requirement under an agreement reached with the European Union and the International Monetary Fund last year in exchange for an 67.5bn euro bailout package. The bill will now be forwarded to the upper house of the Irish parliament, the Seanad, for final approval.
Most Asian stocks fell on Friday, dragging the MSCI Asia Pacific index down by about 0.6 percent, as the threat of further downgrades to Japan's sovereign ratings and downbeat earnings from Canon and Kia Motors raised concerns over global growth.
Crude futures are down 0.12 percent at $85.54 a barrel and the Dow futures are declining 18 points, while the yen and dollar strengthened against most of their major counterparts as investors look ahead to the advance reading of fourth-quarter U.S. GDP due later in the day.
In domestic corporate news, Italian carmaker Fiat SPA posted a EUR 318 million profit for the fourth quarter compared to a EUR 283 million loss last year, primarily due to higher revenues on an improvement in Brazilian sales.
ArcelorMittal, Nunavut Iron Ore Acquisition Inc. and Baffinland Iron Mines Corp. announced changes to the Baffinland Board of Directors.
European stocks closed on a mixed note Thursday, paring mid-session gains, as miners and financial stocks rose, while retailers declined following disappointing results from Swedish fashion chain Hennes & Mauritz. The U.K.'s FTSE 100 index closed down 4 points, while the German DAX added 28 points and the French CAC 40 added 10 points.
