European markets slump amid economic growth, euro concerns

Markets slumped across Europe on Thursday, led by Milan's FTSE MIB index, amid market concern about slowing economic growth in the region and as investors questioned the sustainability of the common currency. Average gross domestic product growth amongst the 20-member G20 group of industrialized nations has slowed to 0.6% in the second quarter compared to 0.7% in the first three months of the year, according to a reportreleased by the OECD on Thursday. Italy posted the slowest growth in the period of the group of twenty nations with a 0.8% drop, whilst the U.K. contracted 0.5% and France posted flat economic growth in the period, according to the report. The Italian FTSE MIB index dropped 1.1% to 16,244 points, as Madrid's Ibex index fell 0.5% to 7,935.9 points. The German Dax index dropped 0.5% to 7,310 points, while Frances Cac 40 index slumped 1.2% to 3,502.1 points. The FTSE 100 index in London gained 0.7% to 5,819.9 points. The spread, a barometer of Italy's borrowing costs in the eurozone crisis, closed at to 345 basis points, with Italian yields at 5%. Italy sold some 1.35 billion euros of one-year bonds on Thursday. Investor demand for the debt exceeded that being offered, according to the Bank of Italy. German Chancellor Angela Merkel on Thursday said the European Central Bank cannot substitute national governments in the need to introduce and execute required reform measures, adding that it would take a long time for the financial markets to recover confidence in the euro single currency. She urged bond spreads to be brought back to "normal levels". The spread is a relative barometer of nation's borrowing borrowing costs generally compared to German ones that is being closely followed by analysts in the eurozone crisis. On Wednesday, Germany's constitutional court approved the country's participation in the European Stability Mechanism, a fund that has been hailed as a permanent bailout mechanism for euro members suffering under the weight of their public debt and soaring bond yields. One of the provisions the ESM will be able to enact is that of buying member-state bonds to curb their spiking bond yields at times of great market turbulence. Greek Finance Minister Yannis Stournaras on Thursday denied a report in the Wall Street Journal that the southern European country may need additional bailout funds. Greece doesn't need a third round of funds, as the ones already approved by the eurozone leaders suffice, said Stournaras.