European Shares Down in Light Trading

European stocks fell on Monday in thin trading, putting a December rally in jeopardy after China’s decision to raise interest rates heightened concerns about the outlook for global growth. In afternoon trading, the DAX in Frankfurt was down 101.92 points or 1.45 percent, while the CAC-40 in Paris lost 46.40 points or 1.2 percent. The FTSE 100 in London was closed. Markets on Wall Street are expected to open lower.

Trader optimism was dented by the Chinese central bank’s announcement over the weekend to raise interest rates, the second time in over two months as it stepped up efforts to rein in inflation. dominican republic divorce

The People’s Bank of China said it would raise the benchmark lending rate by 25 basis points to 5.81 percent and lift the benchmark deposit rate by 25 basis points to 2.75 percent. Traders expect this week’s volumes to be low as many institutional investors have closed the books for the year.

“This implies low trading volumes, like last week, bearing potential risk of large swings in either direction,” traders at Close Brothers said, adding they still expect markets to post double-digit increases for the year. Auto shares, including Daimler, Peugeot, Porsche, BMW and Volkswagen, were the among biggest decliners in Europe after Beijing announced measures to limit new car registrations to tackle congestion in the Chinese capital.

The bond markets gained little support from China’s decision to raise rates as tension surrounding the euro zone’s weaker countries remained high. But there was no obvious escalation after Portugal became the latest peripheral country to have its credit rating cut late last week.

“The market has made its judgment already with regards to the credit quality of Portugal and Ireland. Over the whole crisis the rating agencies have been lagging behind what the market has been pricing in,” Michael Leister, a strategist at WestLB in Dusseldorf, said.

A wave of negative credit rating news in December has seen Irish debt downgraded sharply and fresh warnings of a cut to Greek, Belgian and Spanish ratings.

With many investors reluctant to take on new positions before the end of the year analysts said the ratings actions, along with the resumption of debt sales, could lead to renewed pressure and yield spread widening in January.

The euro inched higher against the dollar in low volume trading with London markets closed on Monday and Tuesday and liquidity expected to be at a premium until the new year.

Markets have put Spain’s debt issuance plans under particular scrutiny since Ireland applied for a bailout, forcing up the Spanish government’s borrowing costs.

The dollar slipped slightly against the Japanese yen. An auction of $35 billion in two-year Treasuries later in the day will be closely watched for clues on where United States bond yields may be headed after a volatile month.