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June 24, 2013, 12:13 p.m. EDT

Fed fears, China bruise European stocks

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By Sara Sjolin, MarketWatch

LONDON (MarketWatch) — European stock markets dropped for a fifth straight day on Monday as investors worried about growth in China and harbored concerns about the prospect of a reduction in central-bank easing in the U.S.

The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.07%  slumped 1.7% to close at 275.66, adding to losses from last week, when the benchmark closed at the lowest level in 2013.

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“There is no doubt that the markets are still in the process of pricing in the Federal Reserve’s plan to tone down its stimulus drive later this year. After last week’s dramatic selloff, investors will be hesitant to enter at current levels, considering the volatility,” said Max Cohen, financial sales trader at Spreadex, in a emailed comments.

Investors fled the stock markets last week after the U.S. Fed Chairman Ben Bernanke said the central bank could start tapering its $85-billion-a-month asset purchases later this year if the economy grows as expected.

U.S. stocks traded lower on Wall Street.

The drops in Europe also came as stocks tumbled in China after Goldman Sachs cut its 2013 forecast on China growth to 7.4% from the 7.8% expected previously, amid fears of a credit crunch. The short-term interbank interest rates spiked last week , with few signs the government will move to ease the liquidity squeeze. Read: Emerging-market rout sparks fears of full-fledged crisis

The People’s Bank of China said on Monday that commercial banks must do a better job of managing their cash and lending, suggesting that they shouldn’t look to the authorities to solve their cash crunch , according to media reports.

“The recent tightening of the interbank market has sent a strong policy signal that the strong credit growth earlier in the year will likely not continue,” the analysts at Goldman Sachs said.

“The liquidity tightening is another indication that the new government has put priorities on tackling the structural problems. These policies help to foster more sustainable medium-term growth, but will test the government’s tolerance for a cyclical downturn. A reversal of the recent tightening is the main upside risk to our new forecast,” they said.

The Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +1.14%  plunged 5.3%, its worst one-day percentage loss in nearly four years.

The negative news surrounding China sent mining firms lower. Miners are sensitive to growth indications on China as the country is a major user of natural resources.

Shares of Antofagasta PLC /zigman2/quotes/200173667/delayed UK:ANTO +0.12%  lost 3% in London, Anglo American PLC /zigman2/quotes/201381512/delayed UK:AAL -0.55%  dropped 4% and Rio Tinto PLC /zigman2/quotes/208934945/delayed UK:RIO -0.30%   /zigman2/quotes/202627887/composite RIO -2.03%   /zigman2/quotes/200083756/delayed AU:RIO -0.84%  fell 3.4%.

Shares of Kazakhmys PLC /zigman2/quotes/208098927/delayed UK:KAZ +0.25%  tanked 13% after the firm said it will sell its entire 26% stake in Eurasian Natural Resources Corp  to the firm’s billionaire founders and the Kazakhstan government. Shares of ENRC dropped 1.4%.

The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.38%  shaved off 1.4% to 6,029.10.

Investors also digested fresh data on German business confidence with the Ifo business-climate index rising to 105.9 in June from 105.7 in May.


Reuters
Shares of Vodafone rise after the telecom firm makes an offer for Kabel Deutschland

Among notable movers in Europe, shares of Kabel Deutschland Holding AG DE:KD8 0.00% rose 1.7% in Frankfurt after Vodafone Group PLC /zigman2/quotes/202484985/delayed UK:VOD -0.27%   /zigman2/quotes/202862751/composite VOD -0.59%  launched a formal 7.7 billion-euro ($10.1 billion) cash offer for the German cable operator. Shares of Vodafone were marginally higher.

Also in Germany, shares of Metro AG  slid 5.5% after Citigroup cut the food retailer to sell from neutral.

The DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX +0.28% lost 1.2% to 7,692.45.  

France’s CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 +0.46%  fell 1.7% to 3,595.63.

Outside the major indexes, shares of Erste Group Bank AG /zigman2/quotes/206853148/delayed AT:EBS +0.28%  slumped 8.5% after the Austrian bank said it is planning a capital increase of 660 million euros.

/zigman2/quotes/210599654/delayed
XX : STOXX
391.90
+0.27 +0.07%
Volume: 0.00
Nov. 27, 2020 12:14p
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/zigman2/quotes/210598127/delayed
CN : China: Shanghai
3,408.31
+38.57 +1.14%
Volume: 28.06B
Nov. 27, 2020 3:01p
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/zigman2/quotes/200173667/delayed
UK : U.K.: London
1,217.00 p
+1.50 +0.12%
Volume: 144,684
Nov. 27, 2020 11:14a
P/E Ratio
45.19
Dividend Yield
0.82%
Market Cap
£11.99 billion
Rev. per Employee
N/A
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/zigman2/quotes/201381512/delayed
UK : U.K.: London
2,254.00 p
-12.50 -0.55%
Volume: 442,698
Nov. 27, 2020 11:14a
P/E Ratio
16.87
Dividend Yield
2.49%
Market Cap
£28.45 billion
Rev. per Employee
N/A
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/zigman2/quotes/208934945/delayed
UK : U.K.: London
4,887.00 p
-14.50 -0.30%
Volume: 572,577
Nov. 27, 2020 11:14a
P/E Ratio
13.96
Dividend Yield
6.08%
Market Cap
£82.49 billion
Rev. per Employee
N/A
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/zigman2/quotes/202627887/composite
US : U.S.: NYSE
$ 66.28
-1.37 -2.03%
Volume: 2.92M
Nov. 25, 2020 7:00p
P/E Ratio
14.99
Dividend Yield
5.82%
Market Cap
$110.38 billion
Rev. per Employee
$852,406
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/zigman2/quotes/200083756/delayed
AU : Australia: Sydney
$ 102.00
-0.86 -0.84%
Volume: 1.11M
Nov. 27, 2020 4:10p
P/E Ratio
15.54
Dividend Yield
5.55%
Market Cap
$150.17 billion
Rev. per Employee
$1.14M
loading...
/zigman2/quotes/208098927/delayed
UK : U.K.: London
639.60 p
+1.60 +0.25%
Volume: 168,068
Nov. 27, 2020 11:14a
P/E Ratio
7.33
Dividend Yield
1.40%
Market Cap
£2.97 billion
Rev. per Employee
N/A
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,338.53
-24.40 -0.38%
Volume: 216,268
Nov. 27, 2020 11:14a
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DE : Germany: Hamburg
108.00
0.00 0.00%
Volume: 197.00
Nov. 26, 2020 12:00a
P/E Ratio
N/A
Dividend Yield
2.94%
Market Cap
€9.21 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/202484985/delayed
UK : U.K.: London
125.34 p
-0.34 -0.27%
Volume: 12.48M
Nov. 27, 2020 11:13a
P/E Ratio
15.95
Dividend Yield
6.40%
Market Cap
£33.37 billion
Rev. per Employee
£423,083
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/zigman2/quotes/202862751/composite
US : U.S.: Nasdaq
$ 16.76
-0.10 -0.59%
Volume: 2.49M
Nov. 25, 2020 4:00p
P/E Ratio
16.73
Dividend Yield
6.19%
Market Cap
$44.65 billion
Rev. per Employee
$537,274
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/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
13,324.33
+37.76 +0.28%
Volume: 16,757
Nov. 27, 2020 12:14p
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/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
5,592.25
+25.46 +0.46%
Volume: 20,231
Nov. 27, 2020 12:14p
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/zigman2/quotes/206853148/delayed
AT : Austria: Vienna
24.84
+0.07 +0.28%
Volume: 239,966
Nov. 27, 2020 12:14p
P/E Ratio
13.14
Dividend Yield
3.02%
Market Cap
€9.98 billion
Rev. per Employee
€211,243
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Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.

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