Stock markets hit skids as car emissions saga widens

Stock markets were subdued Friday after German car giant Daimler launched a probe on its vehicle emissions, following a torrid week for Mitsubishi amid reports of emissions regularities at Renault.

Damiler limited an initial 6.6 percent decline to 5.4 percent mid-afternoon in Frankfurt after the owner of Mercedes-Benz announced late Thursday that it was launching an internal investigation "into its certification process related to exhaust emissions in the United States upon the request of the US Department of Justice".

The announcement came as Volkswagen said it had reached an agreement with regulators to offer "substantial compensation" to US owners of some 480,000 illegally polluting diesel cars.

Despite the German probe also detecting anomalies at Renault the French automaker's share price was holding firm in Paris.

That was not the case for Mitsubishi Motors which suffered another rout Friday, capping a disastrous week that has seen its shares plunge more than 40 percent after the automaker's shock admission that it cheated on fuel-efficiency tests.

In the eurozone, Frankfurt's DAX 30 was down 0.4 percent mid-afternoon at 10.391.17.

The Paris CAC 40 marked time with a 0.1 percent fall.

London's benchmark FTSE 100 index was down 1.0 percent compared with Thursday's close.

On Wall Street, the tech-dominated Nasdaq index tumbled shortly after opening after shares of Microsoft and Google parent Alphabet sank on disappointing earnings, but the Dow managed a small opening gain of 0.10 percent.

Alphabet lost 3.5 percent after reporting earnings per share that lagged analyst expectations by 46 cents, while Microsoft tumbled 6.6 percent as it reported a 25 percent plunge in quarterly profits to $3.8 billion.

The euro was down against the dollar following the European Central Bank's policy meeting on Thursday, which saw the ECB pledge more stimulus help if needed to help boost economic growth and tackle weak inflation.

"The global markets look decidedly haggard this Friday, perhaps a tad overtired from their start-of-the-week surge," noted Connor Campbell, analyst at Spreadex traders.

- Bumpy auto ride -

Ahead of the US open, focus was firmly on the auto sector. Daimler's heavy share-price slide hit also its rivals, but Volkswagen shares limited an early 3.0 percent fall to 1.0 percent while BMW was off 0.8 percent from -2.4 percent in morning trades.

France's Peugeot shed 1.0 percent after earlier losing 2.8 percent.

"Just as the VW fallout was beginning to come under some sort of control, Mitsubishi's admission has reignited fears of a more widespread problem," said Richard J Hunter, head of research at Wilson King Investment Management.

"Whilst there is no suggestion of any wrongdoing, the names of Daimler and Peugeot have also been dragged under the spotlight, with the obvious concern to investors that there may be more problems to come," he told AFP.

French auto giant PSA Group, the maker of Peugeot and Citroen cars, said Thursday its premises had been raided by France's anti-fraud squad as part of a probe into emissions.

Asian stock markets meanwhile mostly retreated on profit-taking Friday, tracing losses in New York, but crude prices rallied on fresh hopes for a deal to limit output.

Tokyo's Nikkei saw a late afternoon burst to end sharply higher for a fourth straight session as the yen plunged on a report the Bank of Japan is considering help for financial groups hit by its negative-rate policy.

Optimism over the Chinese economy and soothing comments from the US that interest rates will not go up before June helped push world markets to multi-month highs ahead of Friday's profit-taking.

- Key figures around 1430 GMT -

London - FTSE 100: DOWN 1.0 percent at 6,315.75

Frankfurt - DAX 30: DOWN 0.4 percent at 10.391.17

Paris - CAC 40: DOWN 0.1 percent at 4,576.45

EURO STOXX 50: DOWN 0.2 percent at 3,145.91

Tokyo - Nikkei 225: UP 1.2 percent at 17,572.49 (close)

Shanghai - Composite: UP 0.2 percent at 2,959.24 (close)

Hong Kong - Hang Seng: DOWN 0.7 percent at 21,467.04 (close)

New York - Dow: UP 0.1 percent at 18,000.32

Euro/dollar: DOWN at $1.1249 from $1.1288 on Thursday

Dollar/yen: UP at 110.62 yen from 109.50