German GDP blow drags down markets

European markets were this morning dragged down by figures showing spluttering German GDP growth.

The slowdown in the Eurozone's strongest economy cast a shadow over today's summit between France's Nicolas Sarkozy and Germany's Angela Merkel aimed at hammering out solutions to the bloc's debt crisis.

The FTSEurofirst 300 index of top European shares was down 0.7 per cent on opening after the grim data. German stocks featured among the top losers, with the DAX index down one per cent. Siemens was down 1.6 per cent and Deutsche Bank dipped by 0.8 per cent.

Meanwhile in the UK investors were also digesting figures which showed Consumer Prices Index (CPI) inflation rose to 4.4 per cent from 4.2 per cent in June. The Retail Prices Index (RPI) measure was unchanged at five per cent.

Miners led the FTSE down with Xstrata and Kazakhmys both losing more than two per cent as fears over stalling economic growth hit commodities, which depend on demand.

Heavyweight oil stocks BP, Shell and BG Group were down 0.7 to 1.4 per cent, also hit by the German GDP blow.

Engineer GKN was down around three per cent while also in the sector IMI lost 2.3 per cent.

Insurance buyout vehicle Resolution was 0.9 per cent down despite reporting a rise in half-year profits.

Among financial stocks Barclays was the biggest faller, nudging down by 2.6 per cent. HSBC lost 0.9 per cent and RBS 0.8 per cent. However, Lloyds was slightly up in early trading.

On the FTSE 250 embattled leisure group Thomas Cook was down 0.7 per cent following the news that the Competition Commission had given it the green light for the takeover of the Co-op's travel shop business.

Across the Atlantic later investors will be eyeing July import and export prices and industrial output data which are due for release.