By Michele Maatouk
European stocks skidded Tuesday, as disappointing U.S. housing figures and a profit warning from the European construction sector added to fears over the sustainability of the global recovery.
The euro reversed earlier losses against the dollar, while gold rose and oil fell.
The Stoxx Europe 600 index closed down 1.7% at 249.44. The U.K.'s FTSE 100 index fell 1.5% at 5155.95, France's CAC-40 index dropped 1.7% at 3491.11 and Germany's DAX shed 1.3% to 5935.44.
Construction and materials shares were the hardest hit after Irish building-materials company CRH /zigman2/quotes/202550827/composite CRH +0.40% issued a profit warning as it posted worse-than-expected first-half results. Traders said the profit warning intensified doubts about the recovery in the world's largest economy, after the company pointed to an unexpected slowdown in the U.S. market, to which it has significant exposure.
The news sent CRH shares nearly 17% lower and had a knock-on effect on the rest of the sector. Wolseley shares fell 5.1%, Saint-Gobain lost nearly 4.7% and the Stoxx Europe 600 index for construction closed down 4.2%.
CRH's fall also hit Dublin, where the ISEQ fell 5.6%.
Amid a general rush to safety, German bunds, Treasurys and the yen rallied.
Stocks fell, with declines worsening late in the session. In the U.S., existing home sales for July plunged 27.2% to their lowest level in fifteen years. The read was nearly twice as much as analysts had expected.
Richard Batty , investment director at Standard Life Investments, said European markets have been very sensitive to weakness in U.S. housing and employment data in recent months amid uncertainty about the sustainability of the recovery.
The data coming out of the U.S. has generally been weak since stimulus packages in housing and the auto industry came to an end, he said.
Risk On, Risk Off
Earlier in Tuesday's trading day, investors largely shrugged off the release of better-than-expected euro-zone industrial new orders data, which showed that factory orders rose 2.5% in June from May, versus expectations of a 1.5% increase.
On Wednesday, the German Ifo business climate index is at 0800 GMT, while in the U.S., durable goods orders are at 1230 GMT and new home sales are at 1400 GMT.
At the time of the European stock markets close, the euro was at $1.2688 from $1.2663 late Monday in New York, and sterling last traded at $1.5469 from $1.5516. The dollar was at 84.27 yen from 85.22 yen, after hitting 83.58 yen, its lowest level since 1995, following the housing data. The greenback was at 1.0298 Swiss francs from 1.0412 francs.
Late in Europe, light, sweet crude for October delivery was down 80 cents at $72.30 on the New York Mercantile exchange. Gold for September delivery was up 0.5% at $1231.55 per troy ounce late in Europe on the Comex division of Nymex.
In major market action: Vedanta Resources skidded7.6% after Indian authorities rejected the firm's plan to mine for bauxite in the state of Orissa.
Copper miner Antofagasta /zigman2/quotes/200173667/delayed UK:ANTO +1.12% dropped 1.5% after the group announced a 91% jump in first-half profit, but also said copper production would be below its original forecast for the year.
Other mining stocks also lost ground, with Rio Tinto /zigman2/quotes/222358280/composite RTP -5.13% dropping 4.3% and Anglo American falling 1.8%.
In Germany, shares of Heidelberg Cement fell 4.9%, making the firm the biggest decliner in the DAX stock index. Shares of steel maker ThyssenKrupp /zigman2/quotes/207409543/delayed DE:TKA +0.22% dropped 2.4%.
Among a handful of stocks trading in the green was U.K. home builder Persimmon /zigman2/quotes/206444744/delayed UK:PSN -0.70% , which gained 0.4% after higher sales volumes and a stronger average selling price boosted profit and helped give the board the confidence to reinstate dividend payments. Other house builders traded lower, with Barratt Developments /zigman2/quotes/209812640/delayed UK:BDEV -1.98% ending down 3.2%.
Bank stocks were also down across the board, with France's Société Générale /zigman2/quotes/206663756/delayed FR:GLE -0.24% and BNP Paribas among the worst performers. They lost 1.4% and 2.1%, respectively.
Simon Kennedy contributed to this article.
Write to Michele Maatouk at email@example.com