Europe Musters a Lukewarm Response to Latest US Interest Rate Cut

Despite modest gains in Asia, European markets were much flatter in the wake of the latest U.S. Federal Reserve move to further slash a key interest rate.

European traders were less enthusiastic than their Asian counterparts following the latest U.S. Federal Reserve interest rate cut down to a range between a quarter of a point, to zero. Trading in Europe was limited to a narrow range.

The mood in Europe is tempered with lingering worries about the U.S. economy and just what a weakening dollar will mean overseas.

Once again, the financial sector in Europe is experiencing a rough ride. Deutsche Bank is down amid talk of a possible fourth quarter loss on investment write downs. HSBC as well is taking a hit.

As the economic gloom works its way now through the real economy, unemployment levels in Europe are going up. In Britain, the number of people out of work and claiming unemployment compensation has risen for a tenth successive month in November and its up by the largest amount since 1991.

Unlike the recession back then, this time London is taking a bigger brunt of the downturn. Alan Leaman, the chief of Britain's Management Consultancies Association says it reflects the changing face of work in the country.

"I think it is partly to do with the way that the economy is just changed since the last recession," said Alan Leaman. "We are much are much more of a service economy now than we used to be. And partly of course where this recession started. It started in finance in particular and of course a lot of those jobs are very highly skilled and very highly powered."

Nearly two million are now unemployed in Britain and the government's employment minister, Tony McNulty warns the worst is yet to come.

"I will say as candidly as I can that I do not think that we have reached the bottom in terms of the unemployment figure but we will see into the new year," said Tony McNulty. "It is not my job to make predictions but it is my job to make sure that through all those levels, the government are doing all that it can to intervene actively to help people."

On the retail level, administrators say all 807 Woolworths' stores in Britain will close by early January if no last-minute buyer can be found to take over the business. The chain employs 27,000.