By Sara Sjolin, MarketWatch
European stock markets fell sharply Tuesday, languishing at their worst in more than two years, with bank shares struggling as fears of a global economic slowdown persisted.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.49% was driven down 1.6% to 309.31, the lowest close since October 2013, according to FactSet data. That marks a seventh straight decline, the longest losing streak since October 2014. The index’s topsy-turvy session opened with a modest gain and at one point suffered a loss of as much as much as 2.6%. The index on Monday dropped 3.5%.
Richard Perry, market analyst at Hantec Markets, said there were a range of factors behind the selloff.
“Concerns about global growth slowing down is the usual excuse, whilst the $100 billion reduction in Chinese FX reserves is also a red warning light. However, it is just a negative swarm of bear pressure through markets that is a real concern,” he said in a note.
“Equity markets are losing key levels of support, and until there is something tangible for investors to hang a positive argument on (such as signs of economic improvement, or perhaps a bullish signal on the oil price), it is difficult to see what will stop the malaise,” he added.
Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX -0.62% , which slipped into bear territory on Monday, lost another 1.1% to close at 8,879.40, and France’s CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 -0.54% gave up 1.7% to 3,997.54, a new 52-week low.
Spain’s IBEX 35 /zigman2/quotes/210597995/delayed XX:IBEX -0.45% ended 2.4% lower at 7,927.60 and the U.K.’s FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.44% lost 1% at 5,632.19. Greece’s Athex Composite /zigman2/quotes/210597948/delayed GR:GD -2.20% dropped 2.9% to 450.83. The Greek government and its international creditors may resume talks next week over a review of the financially strapped country’s compliance with its bailout terms.
Tuesday’s downbeat trading mood in Europe was buttressed by data showing an unexpected drop in German industrial production in December, another sign that Europe’s largest economy ended 2015 on a weak note.
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In Asia, Japan’s Nikkei 225 /zigman2/quotes/210597971/delayed JP:NIK -0.39% tanked 5.4%, as investors grappled with fears of global economic weakness. China’s markets are closed for the Lunar New Year holiday.
Banks: Shares of Deutsche Bank AG /zigman2/quotes/205584254/delayed DE:DBK -4.89% /zigman2/quotes/203042512/composite DB -4.03% were shoved down 4.3%, after losing 9.5% of their value on Monday. John Cryan, the co-chief executive of the German bank, sought to reassure employees about the bank’s finances in a letter Tuesday. In the letter, posted online , Cryan said that while the bank would likely raise legal provisions this year, the lender “remains rock-solid.”
Shares of Swedbank AB /zigman2/quotes/203208387/delayed SE:SWED.A -0.31% slid 5.7% after the Swedish lender, in a surprise move, said it was replacing Chief Executive Michael Wolf with immediate effect.
Other banks were also hit, continuing a sector slump fueled by concerns over the impact of low oil prices, negative interest rates and weak economic growth. The Stoxx Europe 600 Banks Index /zigman2/quotes/210599339/delayed XX:SX7P -0.91% gave up 4%, its lowest close since August 2012, according to FactSet data. The bank index has lost 27% this year.
Credit Suisse Group AG /zigman2/quotes/205269278/delayed CH:CSGN -1.29% skidded 8.4%, and UniCredit SpA /zigman2/quotes/200769686/delayed IT:UCG -3.89% sank 7.9%. UBS Group AG /zigman2/quotes/206994749/delayed CH:UBSG -2.61% /zigman2/quotes/206172872/composite UBS -2.49% fell 5.6%, and Banco de Sabadell SA /zigman2/quotes/206753237/delayed ES:SAB +0.65% gave up 5.7%. Greek banks slumped, with Eurobank Ergasias SA /zigman2/quotes/205402072/delayed GR:EUROB -5.49% sinking 12%.
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