Stocks In Europe Lower After Germany Drops into Recession

European markets ended lower Thursday afternoon, as investors continued to monitor U.S. debt ceiling talks. The region's biggest economy, dropped into recession in the first quarter of 2023.

The CAC 40 in France fell 0.3%, the FTSE 100 in the U.K. dropped 0.4% and the DAX index in Germany traded 0.2% lower.

Thursdays data showed that German Q1 output fell 0.3% from the previous 3 months after a 0.5% drop between Oct. and Dec. This means that Europe's main driver for growth dropped into a winter recession.

In a statement, the German statistics office said households reluctance of to buy was seen in several areas. Households spent less on furnishings, clothing and footwear, and on food and beverages.

The GfK consumer sentiment index for June also indicated that German sentiment stayed weak as the year progressed, and the index only improved slightly from -25.7 in May to -24.2 in June.

In an interview with a Slovenian newspaper on Thursday, Governing Council member Bostjan Vasle said that despite the negative outlook, the European Central Bank has to increase borrowing costs more to push inflation down to its target.

Vasle has now joined several other members of the 26-strong Governing Council of the ECB in saying more hikes were required that may persist beyond the summer months.

European energy prices were already rising when Russias invasion of Ukraine in February last year sent them soaring to record highs. Moscow then went on to throttle gas supplies to European countries, prompting Germany to declare an emergency.