Stocks in Europe Swing to the Downside

NEW YORK (TheStreet) -- European markets were trading mostly lower, after being in the green earlier after the International Monetary Fund upgraded its year-end growth projections for 2009 and 2010.

The IMF forecasts that the world economy will contract 1.1% this year, up from July's estimate of a 1.4% contraction, while in 2010 the world economy will expand 3.1%, up from the 2.5% forecast released in July. Turning to regional growth, the Asian market area will lead the recovery, something that the financial market had widely expected, followed by the U.S. and by the euro area, which is forecasted to have a sluggish 0.3% growth in 2010.

S&P Futures: S&P futures were currently trading 5 points below the Thursday's opening price. Most of these declines came shortly after the London open, even though the index had some small attempts to move higher. The next two important support areas lay in the 1040 and 1035 regions.

Sector Moves: The financial sector had a very rough start during the Asian session, with banks mostly lower on every single market open for trading. This trend continued during the European session with Deutsche Bank (DB Quote) and Commerzbank being among the worst performers in the German DAX, and with the five big U.K. banks -- RBS(RBS Quote), Lloyds(LYG Quote), HSBC(HBC Quote), Standard Chartered and Barclays(BCS Quote) leading the pack of decliners in the FTSE index. On the other hand, banks traded mixed in the France's CAC-40 index, while the banking industry was the best performer on the Swiss Stock Exchange.

The insurance industry was among the top gainers in almost every European market, even though the banking and the insurance industries trade correlated most of the time. Aviva and Standard Life jumped 3% in the U.K., while Munich Re led the gains in Germany.

Economic Moves: The European calendar was relatively flat, with only one top-tier report -- the U.K. Manufacturing PMI -- which failed to reach market's expectations. Throughout the overnight session, a separate report showed that the European unemployment rate rose to 9.6% in August, in line with market's expectations.