European markets close lower

European markets opened the fourth quarter by trading lower Monday on concerns about economic growth prospects in the currency zone that uses the euro.

Traders worried about how austerity measures in Ireland and Greece will curtail job creation, consumer spending and business investment, while new Spanish unemployment data added to the gloom.

London's FTSE 100 index closed with a loss of 0.66 per cent, Frankfurt's DAX was down 1.24 per cent and the Paris CAC 40 lost 1.15 per cent.

Ireland's central bank cut its forecast for growth in gross domestic product this year to just 0.2 per cent from the 0.8 per cent estimated previously.

It said given international fears about the state of Ireland's finances, the government could not shy away from steeper cuts than it has proposed so far.

The outlook came a day after an Irish newspaper, the Sunday Tribune, reported that Ireland's government must impose cost cuts worth $6.2 billion US in its budget in December.

It didn't identify its sources.

The report said the level of cutbacks would be necessary for the government to meet its target of bringing its budget deficit down to manageable levels by 2014.

Greece introduces more austerity

And the Greek government proposed more austerity in its draft budget for 2011 that it submitted to parliament Monday as it tries to trim its deficit further in order to meet the conditions of an international bailout.

The government aims to trim the deficit to seven per cent of gross domestic product by the end of next year.

That was lower than the 7.6 percent target set by the terms of the rescue package by the International Monetary Fund and other countries in the euro currency zone.

At the same time, the Spanish labour ministry reported an increase in claims for jobless benefits as the summer tourism seasons came to and end.

It said claims rose by 48,102, or 1.2 per cent, to four million over the month of September. Compared with the same time a year earlier, claims were up 8.3 per cent.