By Steve Goldstein, MarketWatch
European stocks on Thursday turned lower, as a disappointing reading on the U.S. service sector reignited worries about the global economy.
After suffering its worst single-day loss in nearly 11 months on Wednesday, the Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.07% fell further, losing 0.8% to 374.87. Banks and energy producers paced the decline.
The German market was closed for a holiday.
The Institute for Supply Management reported its worst non-manufacturing index in three years, with a reading of 51.8%. The final reading of eurozone services PMI for September was revised lower to 51.6 from the initial 52 reading, and U.K. services PMI fell into contraction territory as it fell to 49.5 from 50.6.
The bad data comes on top of news the U.S. will introduce fresh tariffs on $7.5 billion of European Union goods following a World Trade Organization victory.
“With markets already looking vulnerable over concerns about a manufacturing recession starting to bleed into a slowdown in the services sector, the timing of the WTO ruling could not have come at a worse time for already jittery investors, along with the U.S. response to apply tariffs to a wide range of goods including malt whisky, French wines, and a range of food items, from October 18th,” said Michael Hewson, chief market analysts at CMC Markets UK.
Analysts at Jefferies said the new tariffs actually weren’t as bad as it feared for European alcoholic beverage makers. Remy Cointreau /zigman2/quotes/206802273/delayed FR:RCO +0.65% shares jumped 5% and Pernod Ricard /zigman2/quotes/204974112/delayed FR:RI +0.56% rose 3.2%, as cognac, champagne and liqueurs from France were excluded from the tariff list. Diageo /zigman2/quotes/205611832/delayed UK:DGE -0.28% and Campari /zigman2/quotes/203520627/delayed IT:CPR +1.30% shares also rose.
Airbus /zigman2/quotes/208224336/delayed FR:AIR -0.95% was another gainer, rising 3.3%, as parts made by one of its plants in Alabama will not be subject to new sanctions. Analysts at Bank of America Merrill Lynch said investors had feared 100% tariff rates instead of the 10% the U.S. government will levy.
H&M /zigman2/quotes/208522175/delayed SE:HM.B -0.67% shares jumped 7% as the retail chain reported a stronger-than-forecast profit.