European markets roiled by rising political uncertainties and weak economic data. Equities across Europe fell sharply today with the Stoxx 600 down 2.3%. Benchmark German DAX and French CAC 40 lost 2.8% and 3.4% respectively. Sovereign bond yields also inched up. The yield on 10-year French government bond rose by 4 basis points to 3.11%, while comparable Dutch bond yield expanded by 7 basis points to 2.39%. Lower-rated 10-year Spanish bond yield again touched 6%.The Purchasing Mangers’ Indices (PMIs) for the Euro area fell for the 3rd consecutive month in April and the pace of decline has accelerated. The composite index fell from 49.1 in March to 47.4 in April. Manufacturing was hit particularly badly with the Euro area manufacturing index failing from 47.7 in March to just 46, which is the lowest in almost three years.In France, election is underway and market believes the opposition leader Hollande, if elected, may reopen the debate over the EU crisis resolution. The French PMI also indicates a sharp fall back in the service sector in April.
