Euro drops as German and Spanish industrial output falls; Stocks up nevertheless

The euro dropped Wednesday after official data showed that factory output figures from Spain and Germany were extremely disappointing.

Germany’s powerhouse manufacturing sector has suffered a poor August, in another signal that the global economy is cooling affecting the German one.

Fresh figures show that industrial output across Germany shrank by 1.2% in August, much worse than the +0.2% which economists had expected.

Meanwhile, Germany’s economy ministry says there is not need to panic, and claims that the drop in factory output is partly due to the summer holidays.

Carsten Brzeski, economist at ING, agrees that’s a factor - but says the figures are still disappointing.

Output at Spain’s factories shrank by 1.4% month-on-month in August.

That’s rather worse than the 0.4% decline which economists had expected, and even sharper than the reversal in Germany.

Stocks shrugged off the downbeat data with Germany's DAX last trading up 0.82% and Spain's IBEX up 0.79%.

London's FTSE 100 was last higher 0.75% with Anglo American higher 8.5%, with Rio Tinto gaining almost 6%.

In the latest company news, brewing giant Anheuser-Busch InBev elevated its proposed takeover offer for British brewer SABMiller to £68bn - which would be one of the biggest half-dozen deals ever, creating a brewing giant producing a third of the world’s beer. There’s not response from SAB yet, but its shares are up 3% as traders anticipate more developments.

EUR/USD was last at 1.1228, down 0.40% and GBP/USD was up 0.28% to 1.5267.