Financial News

LONDON (ShareCast) - Bourses moved steadily lower through the session as weaker economic growth forecasts from the World Bank upset investors.

The Washington-based lender warned that prospects for the global economy remain "unusually uncertain".

It expects the global economy to contract by 2.9% in 2009, having predicted a 1.7% decline in March. The eurozone is seen shrinking 4.5% versus 2.7% before.

Oil plays struggled as crude prices fell below $68 a barrel. Total and Royal Dutch Shell (Amsterdam: RDSA.AS - news) were among the losers.

Sellers also hurt carmakers. Renault (Paris: FR0000131906 - news) skidded lower after Standard & Poor's cut its long-term corporate credit and debt ratings on France's second-biggest carmaker to BB from BBB-. Peugeot (Paris: FR0000121501 - news) fell in sympathy.

Across the markets, the Frankfurt fell 146 points to 4,693, Paris sank 98 to 3,123, while Zurich lost 111, ending down at 5,310.

Elsewhere, the Ifo index, based on a survey of 7,000 executives, increased to 85.9 in June from 84.3 in May, better than the 85.2 analysts had been forecasting.

"The survey results confirm that the German economy is gradually stabilising," said Ifo President Hans-Werner Sinn, adding that firms' assessment of the current business conditions is still very weak. The current situation assessment fell to 82.4 in June from 82.5 in May.

Meanwhile, Europe's central bank president on Sunday warned that governments must start bringing down budget deficits as soon as next year.

"There is a moment where you can't spend any more and you can't accumulate any more debt. I think we are at that moment," Jean-Claude Trichet said on France's Europe-1 radio. Trichet also predicted the global economy will come "close to stability" later this year before picking up in 2010.