Belfast Telegraph

Saturday 25 October 2014

Zero growth for French economy

France's economic growth sputtered to a halt in the spring as consumers slashed their spending and exports dried up

France's economic growth sputtered to a halt in the spring as consumers slashed their spending and exports dried up, figures have revealed.

The INSEE statistics agency said the country's economy posted zero growth in the second quarter, after growing almost 1% in the first.

The report follows two days of frantic efforts by French officials to soothe investors' nerves after days of suggestions that the country could be the next major economy to lose its coveted triple-A credit rating.

Following the publication of the growth figures, French bank shares were flat or slightly lower in early trading in Paris.

Over the past couple of days, stocks like Societe Generale and BNP Paribas have been hugely volatile amid rumours of their financial health.

A move by stock market regulators in France and elsewhere across Europe to ban a form of stock market speculation that some are blaming for the turbulent trading in recent days looked to be having some impact, but economists stressed that any rebound was very fragile.

The European Union's markets supervisor, the ESMA, announced the short selling ban late on Thursday after boosting surveillance of stormy markets earlier in the day. In a short sale, a trader hopes to make a profit by betting on the decline in the price of a share. The practice has been blamed for contributing to market volatility.

Regulators in France, Italy, Spain and Belgium are each implementing the bans, whose details vary from country to country.

The French market regulator, the AMF, said that it is banning for 15 days net short-selling on 11 stocks, including those of banks Societe Generale, BNP Paribas and Credit Agricole and leading insurers.

News that French economic growth sputtered to a halt in the second quarter will likely raise concerns that the European economy is being impacted by the debt crisis that has afflicted a number of countries and has fuelled the turmoil in the markets.

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