Stocks fall on European markets as fears of U.S. debt default grow

ROME, May 24 (Xinhua) -- Fears of a potential United States government loan default weighed heavily on European Union (EU) financial markets on Wednesday, with major stock exchanges down across the continent, and the euro flat against the U.S. dollar and other currencies.

Italian media reports estimated that companies on European stock exchanges lost a combined 227 billion euros (244 billion U.S. dollars) in value during trading on Wednesday alone.

Meanwhile, negotiations continued in Washington over whether or not to raise the U.S. government's debt ceiling. If no agreement is reached, the U.S. Treasury will run out of cash in early June, sparking a government default on its debt obligations.

Economists warn that such a development would have profound economic consequences around the globe -- including in Europe, where central banks and private businesses are widely exposed to U.S. government bonds.

Stocks finished broadly lower on Wednesday: the DAX blue-chip index on Germany's Frankfurt Stock Exchange was down 1.9 percent; in Paris, the CAC-40 index lost 1.7 percent; the general index in Madrid surrendered 1.1 percent; and the AEX index in Amsterdam slipped 1.6 percent.

One of the biggest losers was the Italian Stock Exchange in Milan, which retreated 2.4 percent. Banks and large multinationals with exposure to the U.S. economy, such as tire maker Pirelli and aerospace giant Leonardo, suffered the most.

Outside of Europe, stocks were also lower in the United States and Asia.

However, the euro currency rallied at the end of Wednesday's trading session to finish about even compared to Tuesday's close against the U.S. dollar and other currencies.

Recent data showing stubbornly high inflation in the United Kingdom also contributed to Wednesday's stock losses.

A recent uptick in COVID-19 infections globally, as well as predictions that the conflict between Russia and Ukraine is set to intensify, have also weighed on markets in Europe and elsewhere.

The Eurozone's economy grew by 0.1 percent in the first quarter of 2023 compared to the previous quarter, a weaker than expected growth rate, data from Eurostat showed.